Morgan Stanley Cuts National Oilwell Varco To Underweight
In a report published Wednesday, Morgan Stanley analysts downgrade the rating on National-Oilwell Varco Inc (NASDAQ: NOV) to Underweight, with a price target of $53.
The downgrade reflects the expected steep decline in the demand for National-Oilwell's offshore drilling equipment products. "While NOV's emerging FPSO and Wellbore Technologies divisions have momentum, they are unlikely to compensate," the analysts mentioned.
"The company's expansion into floating production solutions offers great promise, but more is needed for this to be a meaningful needle mover," the analysts added.
National-Oilwell needs to make further subsea technology related product equipment acquisitions to have a meaningful impact on the floating production segment or the company's profitability. "A successful expansion could however make NOV's business less cyclical and thereby result in meaningful P/E expansion," the analysts stated.
The company's Wellbore Technologies segment is expected to rebound in 2016 while the Rig Aftermarket and C&P solutions are likely to turn the corner in late 2016. "We therefore see limited absolute downside in NOV's shares, and our downgrade is a relative call versus other earlier cycle peers," the report said.
The EPS estimates for 2Q15, 3Q15 and 4Q15 have been reduced from $0.83 to $0.61, from $0.67 to $0.55 and from $0.56 to $0.55, respectively.
Latest Ratings for NOV
|Sep 2016||Loop Capital||Initiates Coverage on||Hold|
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