UPDATE: Goldman Sachs Downgrades NOV Inc. (NOV) to Sell
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Goldman Sachs analyst Neil Mehta downgraded NOV Inc. (NYSE: NOV) from Neutral to Sell with a price target of $16.00.
The analyst comments "We are downgrading NOV from Neutral to Sell with a 12-month target price of $16. Our view is driven by three key points. First, while the order book could be improving here on, we see several factors (eg. supply chain, pricing power) that are likely to decouple the historical relationship between stock performance and orders in the near term in the current macro environment. Second, investor expectations of long term normalized EBITDA margin may be overly optimistic given activity levels are likely to be meaningfully below 2014 levels and NOV's manufacturing business model is less likely to build in the same degree of operating leverage as asset light service companies. Third, NOV trades at a premium to large cap service companies on a through cycle FCF yield basis on our estimates vs a discount in the past. Shares also trade at a ~2.0x premium to comparable machinery manufacturing companies with similar 2023 margin profiles. We continue to be constructive on the oil price outlook and believe that NOV should benefit from an improving order book, that said, greater upside exists elsewhere in Energy Services including Buy rated BKR, SLB and HAL."
Shares of NOV Inc. closed at $17.29 yesterday.
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