National Oilwell Varco's Stock Falls After Analyst Downgrades Rating, Slashed Price Target

Shares of National Oilwell Varco Inc. slumped 1.9% in morning trade Monday, after SunTrust RH turned bearish on the oil services company, citing concerns over valuation. Analyst Ken Sill cut his rating to sell from hold, and slashed his stock price target to $29, which is 10% below current levels, from $40. He said that while National Oilwell Varco (NOV) is a "great company," with "great management" and a "great balance sheet," he doesn't believe past returns from its Rig Systems business will repeat in the next five or more years. "Expectations implied by NOV's share price appear overly optimistic, in our opinion, based on our 12-to-18 month outlook," Sill wrote in a note to clients. "NOV's share price implies 2018 estimates will rise, we think they need to fall." The stock has fallen 13% year to date, while the VanEck Vectors Oil Services ETF has tumbled 27% and the S&P 500 has gained 11%.