NOV Inc (NOV) to Benefit from Easing Supply Chains - BofA

BofA analyst Chase Mulvehill upgraded shares of NOV Inc (NYSE: NOV) to Buy from Neutral, maintaining a $19 per share price target.

The analyst declared that 2023 could be the trickle-down year for the company.

"Since recent June highs, NOV is down 29%, which compares to capital equipment peer performance of: -24% CHX (ChampionX, flat FTI (TechnipFMC) and -29% WHD (Cactus)," wrote Mulvehill. "Shares have sold off amidst gusting macro headwinds, with 12-month Brent strip -25% over the same period."

Mulvehill added that for NOV, its short-cycle businesses (Wellbore) are doing well, and longer-cycle businesses (CAPS, Rig Tech) are set to benefit from higher customer oil field services and capex and equipment tightness in NAM.

"Note NOV delivered strong EBITDA beats in 1H22 and mgmt. has guided to 2H Adj. EBITDA 45-55% above the 1H level. As such, consensus 2H22 EBITDA has risen 18% QTD to $387mm. We see NOV continuing to benefit from rising OFS capex, better pricing/fixed cost absorption, easing supply chains, and better mix," wrote Mulvehill.

By Sam Boughedda

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