National Bank Canada’s oilfield services market remains “relatively well-balanced” heading into fourth-quarter 2023 earnings season, according to National Bank Financial’s Dan Payne.
“Insulation and opportunity is noted through unique & high-quality exposures, in support of a resilience & quality of earnings that should validate a stability of returns and a very sound risk-adjusted value proposition for the group – very simply, nothing’s hurting and nothing is helping, and an appreciation for balance of a historically volatile sector will be the theme,” said the equity analyst.
However, despite seeing the value proposition of the group remaining “sound,” Mr. Payne reiterated his neutral stance from an investing perspective, hoping for “visibility towards a tangible inflection of activity to support greater momentum of value within the group.”
“Our bias at this time is selective, looking towards names with differentiated value propositions, like an opportunistic narrative in EFX, and an outlier for growth in PSI (tangible growth catalyst to compound its longterm value potential), which are less aligned with the activity cycle than other high-quality businesses like CEU, PD, TCW (which each respectively hold their own value tailwinds),” he said.
His ratings and targets for the other stocks in his coverage universe are:
* Precision Drilling Corp. with a “sector perform” rating and $135 target. Average: $125.47.