Market Overview

Credit Suisse Gets 'Back In The Saddle' With Schlumberger, Sets Outperform Rating

Share:
Related SLB
Jim Cramer Gives His Opinion On AbbVie, Idexx Labs And More
Raymond James: Schlumberger Weathering Weak North American Oil Market
Rockwell Automation, Schlumberger form digital oilfield automation JV (Seeking Alpha)
Related CAM
Goldman's Slick On Oil: Reinstates Coverage On Halliburton And Baker Hughes, Maintains Buy On Schlumberger
Footlocker To Replace Cameron International In S&P 500 Index, DCT Industrial Added To S&P MidCap 400 Index

Schlumberger Limited (NYSE: SLB) is in the process of merging with Cameron International Corporation (NYSE: CAM), which Credit Suisse’s James Wicklund is “an oilfield services company that is exceptionally well positioned to gain share, improve margins, and post higher returns near a cyclical bottom.”

The analyst reinstated coverage of Schlumberger with an Outperform rating and price target of $80.

Accretive Merger

“SLB bought CAM in the midst of a transformational effort to (1) make the company more efficient, integrated and technologically capable and (2) to shift to a more performance-compensated business model by being present at the wellhead for a longer period of time,” Wicklund mentioned.

The analyst explained these structural changes to the oilfield services business model were aimed at improving returns to a market leading figure.

Wicklund believes Cameron International’s historical return profile would be accretive to Schlumberger’s returns, EPS and economic profit.

Market Leader

According to the Credit Suisse report, “When the market begins to recover, the structural changes in the industry will be from the development and efficient application of technology, the efficient deployment of capital, and the ability to manage risk in pursuit of higher returns.”

Schlumberger’s commitment to superior profitability and technology, especially given the backdrop of a company that was able to transform during a downcycle, combined with the company’s wide capabilities, would minimize the impact of any slowing in deepwater and exploration activity.

Latest Ratings for SLB

DateFirmActionFromTo
Jan 2019CitigroupMaintainsBuyBuy
Dec 2018Credit SuisseDowngradesOutperformNeutral
Dec 2018JP MorganDowngradesOverweightNeutral

View More Analyst Ratings for SLB
View the Latest Analyst Ratings

Posted-In: Credit Suisse James WicklundAnalyst Color Long Ideas Initiation Analyst Ratings Trading Ideas

 

Related Articles (CAM + SLB)

View Comments and Join the Discussion!

LendingTree Clients Apparently Very Happy; Northland Analyst Hikes Target After Latest Conversation

Sanofi Shares Rise After Company Agrees To Sell Nichi-Iko Pharma Stake