RayJay On Schlumberger: North American Market Seems To Have Bottomed, International To Lead Growth In Second Half

Following the oil price collapse in late 2018, Schlumberger Limited. SLB witnessed a slow start to 2019, both in the U.S. and abroad, according to Raymond James.

While the North American market could recover through the year, international is likely to drive the company’s revenue growth in the back half of 2019, the sell-side firm said Tuesday.

The Analyst

Raymond James’ Praveen Narra maintains a Market Perform rating on Schlumberger.

The Thesis

Schlumberger could beat the low first-quarter expectations, but the reported figures are unlikely to highlight the improving fundamental outlook, Narra said in the note.

The North American market seems to have bottomed and could improve through the year, the analyst said. Activity already started increasing in the first quarter, and a recovery in most regions could boost the company’s second-quarter performance, he said.

A 7.7-percent sequential decline in North American revenue could occur in the first quarter, followed by modest 0.1-percent growth in the second quarter, Narra said. The positive impact of a recovery in volumes will be offset by depressed pricing, the analyst said.

International revenues may be down 2.4 percent in the first quarter, but this is below the normal seasonal decline, Narra said, adding that international revenues are expected to grow 2.4 percent in the second quarter.

Raymond James raised its Schlumberger revenue estimate for 2019 from reflecting a decline of 1 percent to recording 2.6-percent growth.