Credit Suisse Upgrades Oilfield Services & Equipment Sector Along With (SPN), (NBR), (PTEN), And (PDS), Downgrades (BHI)

Credit Suisse analyst James Wichlund is upgrading the sector and select names citing seasonal and cyclical recovery trade for 2017. Wichlund actions are as follows:

• Superior Energy Services (NYSE: SPN) upgraded from Neutral to Outperform, PT raised from $15 to $21.
• Nabors Industries (NYSE: NBR) upgraded from Neutral to Outperform, PT raised from $12 to $21.
• Patterson-UTI Energy (NASDAQ: PTEN) upgraded from Underperform to Neutral, PT raised from $18 to $23.
• Precision Drilling (NYSE: PDS) upgraded from Underperform to Neutral, PT raised from $4.25 to $6.00.
• Baker Hughes (NYSE: BHI) downgraded from Outperform to Neutral, PT raised from $61 to $65 citing a "significantly disconnected" valuation from the business fundamentals.

Wichlund says "OFS stocks are not cheap on any 2018 valuation metric. But we expect to see upward earnings revisions to start in 1Q17 and continue for the next few years. This is the inverse of the past two years of downward earnings revisions, as we expect management teams to underpromise and over-deliver on pricing and utilization gains as the cycle turns. We see significant upside potential to 2018 estimates (including our own), which will normalize the valuations much more than is currently understood."

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