NOV Inc. (NYSE:NOV -5.3%) slumps from a two-year high after Bank of America double downgrades shares to Underperform from Buy with a $22 price target, one of three oilfield services stocks cut at the firm after the group's massive rally during the past two weeks (NYSEARCA:OIH).
NOV's risk-reward balance is no longer skewed positive after the stock's 35% month-to-date run-up, and "Russia is only going to create a tighter global supply chain that could delay the margin recovery story that was core to our bull thesis," BofA's Chase Mulvehill writes.
"We are not 100% confident that Russia developments don't make sourcing materials like aluminum, copper, nickel and steel more problematic for a company that was already struggling with its supply chain and material cost inflation," according to Mulvehill.
The firm also cuts Cactus (WHD -7.1%) and ChampionX (CHX -1%) to Neutral from Buy, but upgrades Chart Industries (GTLS +0.8%) to Buy from Neutral, believing "the positives around incremental LNG infrastructure and liquefaction facilities will more than offset any slower than expected margin recovery during 2022," and Liberty Oilfield Services (LBRT +1.5%) to Buy from Neutral, citing the company's valuation after a recent string of quarterly misses vs. consensus.
Goldman Sachs had downgraded NOV to Sell even before the March run-up, saying the stock traded at a premium to oilfield services peers.