On Monday, BMO Capital Markets adjusted its outlook on Schlumberger Limited (NYSE: NYSE:SLB), a leading oilfield services company. The firm's analyst reduced the price target to $64 from the previous $66 while maintaining an Outperform rating on the stock.
The revision comes after Schlumberger's first-quarter results for 2024, which the analyst described as consistent with expectations. The company's guidance for the second quarter suggests earnings per share (EPS) in the range of approximately $0.82 to $0.84, aligning closely with the consensus.
Despite the common anticipation of quarterly earnings surpassing expectations, the analyst noted that Schlumberger's shares are currently valued near the lowest point of the cycle, indicating that the market no longer expects the company to exceed consensus estimates significantly.
Looking ahead, the analyst anticipates that robust international growth will likely balance out any incremental weakness in North America for the remainder of the year. Even with these adjustments, Schlumberger is expected to outperform the market in this region.
The adjustment in the target price and estimates is slight, and the figures remain close to the consensus for the company's 2024 and 2025 EPS. BMO Capital's stance on Schlumberger remains positive, citing the company's dominant position in the growing international and deepwater markets as a key factor.
InvestingPro Insights
As investors weigh BMO Capital Markets' latest assessment of Schlumberger Limited (NYSE: SLB), it's worth considering the company's financial health and market performance through the lens of InvestingPro data. Schlumberger boasts a substantial market capitalization of $71.25 billion, reflecting its significant presence in the oilfield services sector. The company's current P/E ratio stands at 16.62, suggesting a relatively high valuation compared to its near-term earnings growth, as indicated by the PEG ratio of 1.37 for the last twelve months as of Q1 2024.
In the same period, Schlumberger reported a revenue increase of 14.2%, demonstrating its sustained ability to grow its top line. However, the company's gross profit margin was reported at 19.97%, which may raise concerns about its profitability relative to revenue. On a brighter note, Schlumberger has a commendable track record of dividend payments, having maintained them for 54 consecutive years, with a dividend yield of 2.21% as of the latest data.
InvestingPro Tips reveal that analysts have recently revised their earnings expectations downwards for Schlumberger, yet they predict the company will be profitable this year. Additionally, the stock is known for low price volatility, which may appeal to investors seeking stability. For those looking to dive deeper into Schlumberger's financials and stock performance, there are additional tips available on InvestingPro, which can be accessed using the coupon code PRONEWS24 for an extra 10% off a yearly or biyearly Pro and Pro+ subscription. With 6 more InvestingPro Tips available, informed investment decisions are within closer reach.
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