Schlumberger (SLB) Downgraded by Zacks Investment Research to Strong Sell
Zacks Investment Research cut shares of Schlumberger (NYSE:SLB) from a hold rating to a strong sell rating in a research note published on Friday.
According to Zacks, “The pipeline bottleneck problem in the Permian Basin has been hurting the Schlumberger’s operations in U.S. shale plays. Worryingly, the company expects the problem associated with the constraint in pipeline transportation capacity to last well into 2019. Most importantly, the ongoing weakness in oil prices is unlikely to recover before mid-2019. Low oil is hindering the upstream energy players to invest for exploration and production operations. This in turn will lower demand for oilfield services of Schlumberger. Moreover, the oilfield service player’s total debt is almost six times its total cash balance. Also, compared with the peer group, the company has higher long-term debt to capital ratio, which reflects a more levered balance sheet.”
Several other research analysts also recently issued reports on the stock. Citigroup dropped their target price on shares of Schlumberger from $77.00 to $72.00 and set a buy rating on the stock in a research note on Monday, October 22nd. HSBC upgraded shares of Schlumberger from a hold rating to a buy rating in a research note on Sunday, December 2nd. JPMorgan Chase & Co. downgraded shares of Schlumberger from an overweight rating to a neutral rating and dropped their target price for the stock from $73.00 to $48.00 in a research note on Tuesday, December 11th. Credit Suisse Group dropped their target price on shares of Schlumberger from $82.00 to $71.00 and set an outperform rating on the stock in a research note on Monday, October 22nd. Finally, Bank of America began coverage on shares of Schlumberger in a report on Wednesday, October 17th. They set a buy rating for the company. Two equities research analysts have rated the stock with a sell rating, eight have given a hold rating and sixteen have assigned a buy rating to the company’s stock. The stock presently has an average rating of Buy and an average price target of $70.11.
Schlumberger (NYSE:SLB) last issued its earnings results on Friday, October 19th. The oil and gas company reported $0.46 earnings per share (EPS) for the quarter, topping the consensus estimate of $0.45 by $0.01. The firm had revenue of $8.50 billion for the quarter, compared to the consensus estimate of $8.57 billion. Schlumberger had a negative net margin of 2.00% and a positive return on equity of 6.55%. The business’s revenue was up 7.6% on a year-over-year basis. During the same quarter in the prior year, the firm posted $0.42 earnings per share. On average, equities research analysts expect that Schlumberger will post 1.63 earnings per share for the current fiscal year.
The firm also recently announced a quarterly dividend, which was paid on Wednesday, January 2nd. Shareholders of record on Wednesday, December 5th were issued a dividend of $0.50 per share. The ex-dividend date was Tuesday, December 4th. This represents a $2.00 dividend on an annualized basis and a yield of 4.79%. Schlumberger’s dividend payout ratio is currently 133.33%.
In other Schlumberger news, CFO Simon Ayat sold 60,000 shares of the company’s stock in a transaction that occurred on Tuesday, October 30th. The shares were sold at an average price of $56.60, for a total transaction of $3,396,000.00. Following the completion of the sale, the chief financial officer now directly owns 234,008 shares of the company’s stock, valued at $13,244,852.80. The sale was disclosed in a filing with the SEC, which can be accessed through this link. Also, EVP Patrick Schorn bought 10,000 shares of Schlumberger stock in a transaction on Thursday, December 20th. The shares were acquired at an average cost of $37.55 per share, with a total value of $375,500.00. Following the completion of the acquisition, the executive vice president now owns 35,000 shares of the company’s stock, valued at approximately $1,314,250. The disclosure for this purchase can be found here. 0.48% of the stock is currently owned by corporate insiders.
A number of hedge funds have recently made changes to their positions in the business. Capital International Investors increased its stake in shares of Schlumberger by 62.5% in the third quarter. Capital International Investors now owns 33,296,194 shares of the oil and gas company’s stock worth $2,028,404,000 after purchasing an additional 12,810,020 shares in the last quarter. Bank of New York Mellon Corp increased its stake in shares of Schlumberger by 8.0% in the second quarter. Bank of New York Mellon Corp now owns 29,461,493 shares of the oil and gas company’s stock worth $1,974,805,000 after purchasing an additional 2,188,823 shares in the last quarter. American Century Companies Inc. increased its stake in shares of Schlumberger by 20.1% in the third quarter. American Century Companies Inc. now owns 10,218,188 shares of the oil and gas company’s stock worth $622,492,000 after purchasing an additional 1,707,050 shares in the last quarter. Schroder Investment Management Group increased its stake in shares of Schlumberger by 31.5% in the third quarter. Schroder Investment Management Group now owns 4,303,769 shares of the oil and gas company’s stock worth $262,185,000 after purchasing an additional 1,030,579 shares in the last quarter. Finally, Sound Shore Management Inc. CT purchased a new stake in shares of Schlumberger in the third quarter worth $61,845,000. 77.67% of the stock is owned by institutional investors and hedge funds.
Schlumberger Limited supplies technology products and services to the oil and gas exploration and production industry worldwide. The company's Reservoir Characterization Group segment provides reservoir interpretation and data processing services; open and cased-hole services; slickline services; exploration and production pressure and flow-rate measurement services at the surface and downhole; software integrated solutions, such as software, consulting, information management, and IT infrastructure services; consulting services for reservoir characterization, field development planning, and production enhancement; and petrotechnical data services and training solutions, as well as integrated management services.
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