National Bank 10:49 AM EDT, 07/04/2023 (MT Newswires) -- National Bank of Canada said Monday that activity in the oilfield services sector is softening, while noting that pricing and margins have peaked and earnings and sentiment are expected to similarly decelerate in the near term.
The bank said any associated drag to the equities should be viewed as an opportunity to consolidate exposure to the activity-linked oilfield services group, where the relative stability and quality of earnings suggest significant risk-adjusted and compounding value over the long term.
National Bank said Pason Systems Inc. (PSI.TO)'s management noted that activity looks to be troughing modestly below expectations, while the medium-term outlook and resilience of activity remains intact.
National Bank gave Pason an outperform rating with a $20 price target.
Meanwhile, the bank said Precision Drilling Corp. (PD.TO)'s management remains constructive towards the outlook while noting that US activity has softened. Greater stability and visibility are expected to be restored as the macro picture evolves through year-end, the bank added.
Precision received an outperform rating with a $135 price target.
National Bank said Trican Well Service Ltd. (TCW.TO)'s management noted that while activity has softened for the Canadian pressure pumpers, the trend has not been significant. With that, price competition is increasingly being noted although the company remains disciplined and intact as a reflection of its logical orientation to returns.
The bank gave Trican an outperform rating with a $6.75 price target.
Price: 65.50, Change: +0.83, Percent Change: +1.28