Oil service stocks took a hit Tuesday, highlighted by the 4.3% selloff in Helmerich & Payne Inc. shares , after Goldman Sachs soured on the sector's valuations amid concerns that rig count growth will "flatten out" over the next few years. Analyst Waqar Syed cut H&P's rating to sell from neutral, and slashed his stock price target to $45, which is 21.5% below current levels, from $63. Syed said he believes rig count growth should plateau, after more than doubling over the past year, given budget constraints for exploration and production companies, the fact that pressure pumping capacity isn't keeping pace at which wells are being drilled and because of improving well productivity. As a result, Syed cut his stock price target on Nabors Industries Ltd. to $15.25 from $17.50, Halliburton Co. to $56 from $61, Schlumberger Ltd. to $87 from $90 and Weatherford International Ltd. to $5 from $6.50. The VanEck Vectors Oil Services ETF fell 0.5% in morning trade and has tumbled 17% year to date, while the S&P 500 was up 0.1% on Tuesday, and has gained 7.1% so far this year.
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