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Credit Suisse On Schlumberger: 'We're Calling A Bottom'

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The NAM revenue downtrend seems to be reaching a bottom. Credit Suisse’s James Wicklund maintained an Outperform rating for Schlumberger Limited. NYSESLB, with a price target of $80. The analyst expects a NAM the revenue bottom in 2Q.

“We maintain our Outperform rating on SLB despite our numbers coming down and the near-term valuation not being highly compelling,” analyst James Wicklund said. He added that Q2 is likely to mark the end of the “worst downcycle in 30 years.”

Wicklund commented that technology is likely to become more critical to revenue growth, market share and pricing “as the upcycle unfolds,” while pointing out that Schlumberger is the technology leader “in many lines of business.”

Weak, Not Dying

Although the rate of recovery is likely to be positive, the increase in oil prices is expected to slow from the 40 percent rate witnessed over the past three months, and “a better understanding of the timing of the recovery offshore and internationally is slightly more negative than positive,” Wicklund mentioned.

The analyst added, however, that in the past, the largest OFS company with the highest technology has proved to be a good entry point at the bottom of a price and activity cycle. “We see no real difference this time.”

Estimate Changes

The EPS estimates for 2016 and 2017 have been reduced from $1.61 to $1.15 and from $2.32 to $2.31, respectively. The EPS estimate for 2018 has been raised from $3.43 to $4.00.

Apr 2016Morgan StanleyMaintainsOverweight
Apr 2016Cowen & CompanyMaintainsOutperform
Apr 2016NomuraMaintainsBuy

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