Oilfield services and equipment stocks delivered strong Q1 results, mainly driven by stable North American activity and better-than-feared Middle East impact, Morgan Stanley said in a note Thursday.
According to the note, Middle East disruptions remained the main near-term headwind for the sector, but management teams broadly described the impact as "transitory."
Companies including Baker Hughes (BKR), Halliburton (HAL), SLB (SLB), NOV (NOV), Helmerich & Payne (HP), and Tenaris (TS) pointed to effects such as offshore activity curtailments, supply chain friction, higher logistics costs, and softer regional activity.
The companies also highlighted incremental activity upside outside the region, as customers increasingly focus on energy security and supply diversification. Tenaris noted that operators are already accelerating North American and offshore activity in response, while Transocean (RIG) said the conflict has reinforced the global energy security imperative, the bank said.
"The broader takeaway was that the geopolitical shock may ultimately extend the international and offshore upcycle, thus supporting a more constructive medium-term backdrop," the firm added.
Morgan Stanley raised its price targets on Tenaris to $53 from $50 and on Helmerich & Payne to $39 from $35.
Price: 62.98, Change: -0.62, Percent Change: -0.97
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