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Schlumberger (SLB) Up 11.3% in a Day: What's Behind the Rally?

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Shares of Schlumberger Limited (SLB - Free Report) have jumped 11.3% on Nov 16. The Zacks Rank #3 (Hold) stock, with a market cap of $27.9 billion, has witnessed a rise in Zacks Consensus Estimate for 2020 and 2021 earnings in the past 30 days.

 

Let’s delve deeper into the factors behind the stock’s price appreciation.

What’s Favoring the Stock?

Although the price of West Texas Intermediate (WTI) crude, hovering around $40 per barrel, is significantly below the 2020-beginning price of more than $60 mark, the commodity price has improved considerably over the past few months. The momentum is likely to continue since the market has witnessed positive vaccine results, raising hopes that fuel demand will recover soon. 

Notably, early data from Moderna, Inc.’s (MRNA - Free Report) pivotal study claimed that the company’s vaccine is 94.5% effective in protecting individuals from the deadly virus. Thus, this is the second vaccine that has reached a milestone after Pfizer Inc. and partner BioNTech said earlier this month that initial data has revealed that their vaccine is more than 90% effective.

The positive vaccine data has raised hopes that fuel demand will recover to pre-pandemic level once majority of people in the world gets vaccinated. Overall, rising oil prices will encourage explorers and producers to employ more rigs in the shale plays, there improving demand for oilfield services.

Notably, oilfield service companies help oil drillers to effectively drill crude wells. Schlumberger, being a leading oilfield service company, is likely to capitalize on the improving demand as reflected in the jump in the company’s stock price.

Stocks to Consider

Better-ranked stocks worth considering in the energy space include PDC Energy Inc. and Matador Resources Company (MTDR - Free Report) . While PDC Energy sports a Zacks Rank #1 (Strong Buy), Matador carries a Zacks Rank #2 (Buy).You can see the complete list of today’s Zacks #1 Rank stocks here.

PDC Energy is likely to see earnings growth of 13.3% in 2020.

Matador has seen upward estimate revisions for its 2020 bottom line in the past 30 days.

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