Schlumberger Faces Headwinds Despite Strong Market Position
With a market cap of $58 billion, Houston, Texas-based Schlumberger Limited (SLB) stands as a key player in the global oilfield services sector. The company delivers technology and solutions for the energy industry, assisting oil and gas explorers in hydrocarbon discovery, well construction, production optimization, and carbon management.
Schlumberger’s Market Position and Recent Performance
Stocks valued at $10 billion or more fall into the “large-cap” category, and Schlumberger fit this definition. It boasts a significant footprint in nearly all major oilfield markets, providing an extensive array of products and services designed to improve efficiency in hydrocarbon exploration and production.
Nevertheless, Schlumberger has seen a decline of 27.2% from its 52-week high of $55.69. In the last three months, shares of SLB have increased by 1.5%, which is modest compared to the Energy Select Sector SPDR Fund’s (XLE) increase of 4.2% in the same period.
Year-to-Date Declines and Moving Averages
On a year-to-date (YTD) basis, SLB shares are down 22%, which is notably worse than XLE’s 6.3% gain. Over the last 52 weeks, Schlumberger’s shares have dropped 17.5%, contrasting with XLE’s 8.3% rise. Furthermore, SLB has been trading below its 50-day and 200-day moving averages since mid-April, despite some fluctuations in the market.
Q3 Earnings Report and Market Reaction
In its recent earnings report, Schlumberger announced a better-than-expected Q3 adjusted EPS of $0.89. Despite this positive news, SLB’s shares fell 4.7% on October 18. The drop was attributed to a cautious outlook for Q4, as producers are limiting budgets and reducing spending due to weak oil prices. Additionally, the company’s revenue of $9.2 billion fell short of analyst expectations, impacting investor sentiment negatively. Concerns about slow growth in North American activity and decreased drilling in certain areas further fueled the negative market response.
In comparison, Schlumberger’s rival, Baker Hughes Company (BKR), has *surged 30%* over the past 52 weeks and boasts a 24% increase on a YTD basis, significantly outperforming SLB.
Analysts Remain Optimistic
Despite the stock’s recent struggles, analysts maintain a positive outlook. SLB currently holds a consensus rating of “Strong Buy” from the 23 analysts covering the stock, and the mean price target of $58.06 indicates a potential upside of 43.8% from current levels.
On the date of publication,
Sohini Mondal
did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article are solely for informational purposes. For more information, please view the Barchart Disclosure Policy
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
