NOV upgraded at Morgan Stanley as oilfield services trend remains positive
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NOV Inc. (NYSE:NOV) edged higher in Wednesday's trading as Morgan Stanley upgraded shares to Overweight from Equal Weight with a $24 price target, bumped up from $21 previously, citing its increasing conviction that the largest global supplier of oilfield services equipment is approaching an inflection point for earnings and free cash flow.
Morgan Stanley analysts led by Connor Lynagh see less terminal value risk for NOV (NOV) given its exposure to energy transition markets, supporting their estimate that NOV has a positive market implied long-term growth rate vs. several peer valuations discounting negative growth.
The analysts also see NOV's (NOV) potential for significant meaningful capacity reinvestment due to older capital bases and technology flowing from North American shale into other key markets.
The firm believes international oilfield service companies including Baker Hughes (BKR), Halliburton (HAL) and Schlumberger (SLB) have the best potential to meaningfully improve their through-cycle pricing; NOV (NOV) also boasts significant exposure to international markets.
NOV (NOV) is a beneficiary of upstream oil and gas capex, and is poised to benefit from the "inevitable increase" in investments, Hunting Alpha writes in an analysis published on Seeking Alpha.