Morgan Stanley Sees Weatherford, Schlumberger As Beneficiaries Of Baker Hughes/Halliburton Deal

In a research note Tuesday morning, analysts at Morgan Stanley commented on the beneficiaries of the Baker Hughes Incorporated BHI Halliburton Company HAL deal, citing Weatherford International plc WFT and Schlumberger Limited SLB as the near-term beneficiaries.

They reason that "Certain NOCs may now invite WFT to bid on tenders previously not open to them. We think SLB would greatly benefit in the event of any paralysis due to an extended timeline to close the proposed BHI/HAL merger. However, longer term we expect much needed industry efficiencies to benefit the “new Big 3” and the industry as a whole."

They also expect Schlumberger and Weatherford to gain share near-term, but look for Halliburton to narrow its valuation discount to Schlumberger on "improved ability to handle more complex international tenders and scope to improve BHI's underperforming NAm margins."