Schlumberger warming has moved above analysts’ sentiment
Schlumberger (NYSE: SLB) Stock warming has moved higher in analysts’ sentiment and that sentiment is emerging. At least 5 upgrades or price targets have been raised since March 31st and we do not see this trend ending. The incredible rise in oil prices continues to drive record / undefeated profits in the energy sector and some of that cash is being reinvested in technology improvements, new wells and other services provided by Schlumberger. The latest activity is a pair of comments that include a double upgrade from neutral to overweight by Piper Sandler. Piper Sandler pegged the stock price at $ 55, from $ 43, and compared it to the be 44.95 Marketbeat.com agreed price target.
The other comment came from Morgan Stanley, who maintained an overweight rating while raising the price target to $ 50. These upgrades, including a string of price target increases last month, have been approved by Marketbeat.com over the past three months and a month.
Goldman Sachs, which raised its rating to Conviction by From Buy in late March, also stocked up on one of its screens this week. The screen was for pricing power and margin power and suggested that Schlumberger would be one of the better-earning stories this quarter and that the energy sector was going to be flushed with good news. Morgan Stanley, coincidentally, has issued upgrades to its price target to meet higher margin expectations and demand for services.
Schlumberger’s institutional holdings are growing
The trend of institutional holding and ownership is also supporting the price action in Schlumberger. Although the activity is strong on both sides of the equation, the net of last year’s activity is bullish and especially Q1 activity is very bullish. Institutional activity in Q1 netted stocks worth $ 2 billion, equivalent to about 3.35% of the market cap and increased total holdings by 75%.
Turning to earnings, the earnings outlook has shrunk to a narrow range from what we have seen over the past few years due to increased visibility for businesses. The company is expected to post $ 5.93 billion for Q1, about 15% more than last year, and we see the opposite risk in numbers as well as in the guidelines. As such, analysts expect earnings to be higher in the next 6 quarters, and those estimates are rising.
The store has a large dividend increase for Schlumberger
Schlumberger has cut its dividends in the wake of the epidemic in an effort to maintain cash and balance sheet health. Those efforts have paid off in the last two years, so now that revenue and revenue growth and business are expected to increase, we see dividends returning to its pre-covid levels in one or more increments. The current payout is only 26% of the pre-COVID payout so we are talking about a very significant increase and catalyst for the share price. Dividends pay about 1.2% at current rates.
Technical Outlook: Schlumberger is retrofitting
Prices in Schlumberger have been declining for many years due to declining demand for oil field services. That trend is over, however, and a reverse is happening. With price action now above the $ 33 level and gaining momentum, we look forward to moving up to the next $ 60 level. Schlumberger will report earnings next April 22nd.