Oil States International's Strong Fundamentals Fighting Against Fall In Oil Market

Credit Suisse on Friday issued a report on Oil States International, Inc. OIS, downgrading the company from Outperform to Neutral and lowering its price target from $56 to $43.

Amid the continuing fall in oil prices, analysts James Wicklund, Jonathan Sisto and Jacob Lundberg wrote, "With low debt and plenty of cash flow coverage, the disciplined management team is in an excellent position to take advantage of the downturn...But the magnitude of the negative impact across all the businesses is enough to force a shift in rating to Neutral."

Oil States International, with a 7 percent debt to capitalization and 0.3x debt to EBITDA ratio, is well positioned to grow during this downturn in the market compared to its competitors. However, comparing 2008-2009 to current times, the analysts said that the rate of recovery will be slower this time as it may take several years for the U.S. high service-intensive horizontal rig count to get back to Q4 2014 levels. Its cash flow coverage will be instrumental in helping them recover when commodity prices begin to stabilize and rise upwards.

Oil States International was trading at $41.58, down 3.5 percent.