BKR - New developments have UBS finding new upside/downside in oilfield services

Updated estimates on oil equipment/services companies have led to new price targets from UBS - but still a clear favorite and least favorite among the names. The bank is updating models to account for several factors, including not only new company guidance and developments but also "incremental improvement" in North American activity (with higher commodity prices, and with upstream names renegotiating service contracts); some expected "marginal" improvement internationally, with an expected spending increase by NOCs and internationally focused E&Ps after "years of underinvestment"; and the growing penetration of digital/technological solutions. In the new estimates, UBS is sticking to enterprise value-to-2022 EBITDA as a primary valuation methodology - but notes the market is still compressing multiples across the entire fossil fuel chain. "We have our target multiples for oil & gas-driven EBITDA streams in line with the 2019 levels as the period reflects oil prices and similar stability in the current

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New developments have UBS finding new upside/downside in oilfield services