With a market cap of $58 billion, Houston, Texas-based Schlumberger Limited (SLB) is a global leader in oilfield services, providing technology and solutions to the energy industry. It supports oil and gas explorers with services ranging from hydrocarbon discovery and well construction to production optimization and carbon management.
Companies valued at $10 billion or more are generally considered “large-cap” stocks, and Schlumberger fits this criterion perfectly, exceeding the mark. With a presence in nearly every major oilfield market, Schlumberger offers a comprehensive range of products and services to help maximize efficiency in the exploration and production of hydrocarbons.
However, Schlumberger has fallen 27.2% from its 52-week high of $55.69. Shares of SLB have risen 1.5% over the past three months, which is less pronounced than the Energy Select Sector SPDR Fund’s (XLE) 4.2% rise over the same time frame.
In the long term, SLB is down 22% on a YTD basis, lagging behind XLE’s 6.3% gain. Moreover, shares of Schlumberger have declined 17.5% over the past 52 weeks, compared to XLE’s 8.3% increase over the same time frame.
To confirm the bearish price trend, SLB has been trading below its 50-day and 200-day moving averages since mid-April despite a few fluctuations.
Despite reporting better-than-expected Q3 adjusted EPS of $0.89, SLB's shares fell 4.7% on Oct. 18 due to a cautious outlook for Q4, as producers are tightening budgets and spending less amid weak oil prices. Additionally, the company's revenue of $9.2 billion missed analyst expectations, further dampening investor sentiment. Concerns over muted growth in North American activity and reduced drilling in certain regions contributed to the negative market reaction.
To emphasize the stock’s underperformance, its rival Baker Hughes Company (BKR) has surged 30% over the past 52 weeks and is up 24% on a YTD basis, outperforming SLB stock.
Despite the stock’s weak price action, analysts are bullish about its prospects. SLB has a consensus rating of “Strong Buy” from the 23 analysts covering the stock, and the mean price target of $58.06 represents a premium of 43.8% to current levels.
