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Schlumberger Tops Q2 Earnings Estimates; Target Price $35

Schlumberger, a technology company that partners with customers to access energy, reported better-than-expected earnings in the second and issued an optimistic outlook for this year as higher oil prices boosted the company’s demand.

The Houston-based company reported quarterly earnings of 30 cents per share, comfortably above the analysts’ expectations of 26 cents. Meanwhile, revenues of $ $5.63 billion topped estimates by $ 5.51 billion.

“Absent any further setback in the recovery, we continue to see our international revenue growing in the second half of 2021 by double-digits when compared to the second half of last year. This translates into full-year 2021 international revenue growth, setting the stage for a strong baseline as we move into 2022 and beyond,” said Schlumberger CEO Olivier Le Peuch.

At the time of writing, Schlumberger shares traded 0.25% higher at $28.05 on Friday. The stock has surged over 28% so far this year.

Analyst Comments

“Wider beat than peers with strong FCF. No real change to outlook except to say the potential for further upside to financial targets where Schlumberger (SLB) has already reached the high end of the annual target for 250-300bps of EBITDA mgn increase. No mention of the “supercycle” used in recent presentations. We wonder how much oil price helped APS, which is said to have contributed to the D&I strength,” noted Marc Bianchi, equity analyst at Cowen.

Schlumberger Stock Price Forecast

Eleven analysts who offered stock ratings for Schlumberger in the last three months forecast the average price in 12 months of $35.36 with a high forecast of $40.00 and a low forecast of $32.00.

The average price target represents a 26.92% change from the last price of $27.86. All of those 11 analysts rated “Buy”, none rated “Hold” or “Sell”, according to Tipranks.

Morgan Stanley gave the stock price forecast of $40 with a high of $60 under a bull scenario and $20 under the worst-case scenario. The firm gave an “Overweight” rating on an oilfield services company’s stock.

“Portfolio restructuring masked by downturn: Schlumberger (SLB) has executed a major organizational realignment, which we think has been underappreciated by the market. Defensible market position in the right businesses: We continue to view SLB as the premier OFS franchise, which is now on the right track to value creation. Its high-end businesses have the greatest potential for returns improvement in the coming cycle, in our view,” noted Connor Lynagh, equity analyst at Morgan Stanley.

“Digital & New Energies drive differentiated long-term growth: SLB has developed meaningful partnerships and invested organically in technology to prepare it for two major secular growth trends in the energy industry, which should help address “terminal value” risk.”

Several other analysts have also updated their stock outlook. BofA Global Research raised the price objective to $43 from $42. Citigroup lifted the price target to $40 from $35. JPMorgan upped the target price to $28 from $23. Simmons Energy increased the target price to $29 from $27.5. Stifel raised the target price to $37 from $33.

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