Goldman Sachs Cuts Oil Services from Attractive to Cautious (HAL) (PTEN) (DO) (more...)

Goldman Sachs lowered its ratings on Oil Services from Attractive to Cautious as they cut its 2015 WTI price forecast by 18% to $74/bbl.

Analyst Waqar Syed said, "The biggest impact of this lower price deck should be on US land activity, where we expect customer capital spending to decline 6% next year versus our prior +9%. As a result, we now forecast horizontal US rig count to fall 7%, or by approximately 200 rigs, over the next 12-months."

He added, "With the outlook for offshore drilling already very negative, and US land activity now forecast to fall starting 1Q15, we lower our coverage view from Attractive to Cautious."

On specific stocks, Goldman added OII to CL. They remove HAL from CL but maintain our Buy rating. They downgrade PTEN (CL), PES and EMES from Buy to Neutral, and downgrade BAS from Buy to Sell. They also downgrade DO from Neutral to a Sell.

The firm also lowered significantly their EPS estimates for 2015 and are generally well below consensus. In addition, they adjusted target prices for a number of companies in the sector.

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