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Oil & Oil Services Stocks Up, But Schlumberger Down Following EPS Cut

Oil & Oil Services Stocks Up, But Schlumberger Down Following EPS Cut

Oil and oil services investors got some much-needed relief from OPEC this week when the organization surprised the world and agreed to a production cut.

The news sent the United States Oil Fund LP (ETF) (NYSE: USO) surging 4.1 percent in the past two trading sessions, while the VanEck Vectors Oil Services ETF (NYSE: OIH) spiked 7.6 percent. Leading U.S. oil services giant Halliburton Company (NYSE: HAL) was certainly in on the charge, gaining 4.4 percent on Wednesday and another 3.2 percent on Thursday.

While the world’s largest oil services company, Schlumberger Limited. (NYSE: SLB) was in on the Wednesday rally (+3.5 percent), the stock was back in the red on Thursday. Why did Schlumberger log a 0.8 percent loss while Halliburton gained another 3.2 percent?

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Despite the good news from OPEC and the strong move in oil prices, Well Fargo slightly reduced its Q3 and Q4 EPS estimates for Schlumberger from $0.23/$0.30 to $0.22/$0.27.

Analyst Judson Bailey says that Schlumberger’s numbers are still being dragged down a bit by its Cameron International acquisition.

The good news for Schlumberger shareholders that missed out on Thursday’s OPEC rally is that Wells Fargo remains extremely bullish on the stock in the long-term.

“With best-in-class execution, geographic diversity, and technology as well as the acquisition of Cameron, we believe that Schlumberger is undervalued and represents one of the most attractive opportunities in our oilfield-services universe,” Bailey concluded.

So far this year, Schlumberger shares are up 10.9 percent, while Halliburton has been a sector leader, up 29.7 percent.

Disclosure: the author is long SLB and HAL.

Latest Ratings for SLB

Oct 2020B of A SecuritiesMaintainsNeutral
Oct 2020ScotiaBankMaintainsSector Outperform
Oct 2020BMO CapitalInitiates Coverage OnOutperform

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