- Current seismic industry sales and stock prices are in a free fall, and future visibility is very diminished due to E&P spending cuts and project postponements.
- CGG has a leading market share position in the seismic industry.
- The strong position and low operating leverage in the highest-margin seismic equipment segment will protect CGG’s margins and solvency in a downturn.
- CGG’s restructuring that is under way will align costs with lower sales and will add focus on high-margin equipment and geology/geophysics business.
- At my target price of ~$16, CGG has an 80% upside within a few years but the downside should be protected because CGG’s price could fall further on industry weakness.