Why Jefferies Is Cutting Schlumberger Estimates

In a report published Tuesday, Jefferies analysts maintained a Hold rating on

, while raising the price target from $79 to $80. The EPS estimates for 1Q15 and 2015 have been reduced from $1.17 to $0.88 and from $3.80 to $2.75, respectively. The downward revision reflects weaker-than-expected upstream spending in both NAM and certain sections of non-NAM. The analysts expect revenues in NAM to decline sequentially by 29% (vs. 14% previously) in NAM. In non-NAM, revenues are expected to be down 16% sequentially (vs. 8% previously) on account of "pockets of expected softness" and "additional impact from the new Bolivar and weaker Ruble." "For 2Q, along with continued forex-based pressure, we incorporate the weaker outlook suggested by oil companies recently for the U.S. as they build DUCs. We, for now, do assume a little spending recovery on completing DUCs in 2H (although candidly prospects for any recovery dim as oil price continues to fall)," the analysts added. The company's shares are down 32% from peak. Moreover, the stock is considered "as a resilient hedge against having no exposure to energy" and, even with the downward revision of the estimates, "has less earnings downside risk than peers," the analysts said.