UBS is reducing its 2017 and 2018 EPS of Schlumberger Limited (NYSE:SLB) by 5% / 14% and its EBITDA forecasts by 2% / 7%, respectively. Accordingly, the firm is lowering its price target to $90 from $97. UBS is flattening its revenue growth assumptions for the international markets for both 2017 and all of 2018 given its belief that oil prices remain relatively range bound into 2018. Additionally, the firm is lowering its margin forecasts for Cameron and expect continued pressure on margins throughout 2017 on product mix. However, UBS' revised forecasts do not yet reflect the OneStim JV with Weatherford, which is expected to close in the 2H-17, potentially in Q3. UBS could expects the JV to ultimately add upside to its forecasts.
Schlumberger will hold its first Analyst day since the peak of the market in June 2014. If luck is on the firm's side maybe this event will be at the bottom of the market, but the firm is not holding its breath as this bottom could take a bit of time to play out. UBS believes the company will highlight the potential power within OneStim, as well as a number of technological initiatives.
The firm is reducing its 2017 and 2018 EPS by 5% / 14% and its EBITDA forecasts by 2% / 7%, respectively. UBS maintains its target multiple of 16x 2018 EV/EBITDA. The company is currently trading at a 21% premium to its large cap Oil Service peers, which is in-line with its historical 20%-30% trading range premium.