RBC Capital Markets lowered its 2012 EPS estimate by 6 percent on oilfield services company Schlumberger Ltd. (NYSE: SLB), saying NAM headwinds overwhelms tailwinds.
Despite NAM headwinds, there are plenty of reasons to remain constructive, the brokerage wrote.
SLB has improved its leading GOM market share position by 10 percentage points post moratorium. RBC estimates offshore rig count CAGR over the next two years of 37 percent in US GOM and 10 percent in International markets.
SLB sees positive momentum in seismic and in International/Offshore markets, though this will be offset by the near-term drag from NAM, RBC said.
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"We estimate the stock is discounting about 30 percent - 40 percent reduction in consensus EPS estimates - unlikely in our view," the brokerage wrote. "While Street estimates should move lower, we think revisions represent a headwind, but not incremental risk to share price given valuation."
RBC, which has a "Outperform" rating on the stock, reduced 2012 EPS estimate to $4.15 from $4.40.
The Houston, Texas-based Schlumberger supplies technology, information services and integrated project management that optimize reservoir performance for customers working in the oil and gas industry. The company comprises two business segments. Its Oilfield Services segment supplies including, formation evaluation through directional drilling, well cementing and stimulation. The company's WesternGeco segment provides advanced acquisition and data processing services.
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SLB shares, which have been trading between $54.79 and $95.53 over the past year, advanced 1.24 percent to trade at $70.80 on Monday.