RBC Capital Markets Downgrades National Oilwell Varco to Sector Perform from Outperform, $86.00 PT

In a report published Wednesday, RBC Capital Markets analyst Kurt Hallead downgraded National Oilwell Varco, Inc.

to Sector Perform from Outperform, with a $86.00 price target. According to the report, RBC analysts believe NOV shares are range-bound in the near term due to offshore drilling headwinds that will limit inbound Rig Tech orders. NOV continues to be viewed as a high-quality name and would become more positive on a price pullback into the low 70s. “We are calling for 2014 NOV jackup bookings to average 7 per quarter, down from ~15 per quarter in 2013,” the report noted. “On the floater side, we are expecting bookings to average 3–4 per quarter, down from 7 in 2013. We expect FPSO bookings to show only modest improvement from the ~$1bn in orders expected in 2013.” The report further asserted belief of good chance that NOV increases the dividend at the company's board meeting in May. The view is that management is more committed to returning cash to shareholders and its strong FCF generation profile provides a solid backdrop for a dividend increase. NOV closed Tuesday at $78.48 with shares trading down at 1.69 percent.