from Merrill Lynch today:
Merrill Lynch Investment Highlights for 3/16/01
03/16/01 08:59 AM
Source: Merrill Lynch
Investment Highlights:
Oils
No Earnings Blow-Ups Here, As OPEC Navigates Through the Storm
We are increasing our first quarter 2001 EPS estimates by an average of 9% for the major oils. Upward revisions reflect continued strong oil and natural gas prices, and refining margins, despite further slowing in the global economy.
Our 1Q 2001 EPS estimates are as much as 6% above consensus. Our biggest divergence with consensus continues to be our belief that the current energy industry up-cycle will last at least through 2003. Our FY 2001 and 2002 EPS estimates are as much as 18% and 50%, respectively, above consensus (Table 3).
Our top picks are Chevron (CHV; A-1-1-7; $89.53), ExxonMobil (XOM; A-1-1-7; $82.64), Amerada Hess (AHC; B-1-1-7; $75.42), and Conoco (COC'A; B-1-1-7; $28.70).
Oil Services
Buy Into the Pullback
Oil service stocks have dropped 13% off the 3/9 highs as measured by the OIH oil service holders, which closed 3/15 at 86.16.
We would buy both land and offshore drillers, including Nabors, Patterson Energy/UTI, Noble Drilling, ENSCO, Rowan and Transocean. Also, oilfield equipment and services companies Smith Intl, BJ Services, Weatherford Intl, National Oilwell and Schlumberger are strong buys.
Economics |
