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The Zacks Analyst Blog Highlights: Schlumberger, BP, ExxonMobil, Sunoco Logistics Partners and Williams-Sonoma

Zacks Equity Research

For Immediate Release
 
Chicago, IL – August 14, 2014 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include the Schlumberger Limited (SLB-Free Report), BP plc (BP-Free Report), ExxonMobil Corporation (XOM-Free Report), Sunoco Logistics Partners L.P (SXL-Free Report) and Williams-Sonoma, Inc. (WSM-Free Report).
 
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Here are highlights from Wednesday’s Analyst Blog:

Schlumberger Q3 Earnings to Suffer from Russian Sanctions

Schlumberger Limited (SLB-Free Report) was among the first U.S. oil companies to announce that its quarterly earnings would be hurt due to sanctions imposed by the United States and European Union (EU).

Owing to Russia’s support to rebels in Ukraine, the U.S. has imposed sanctions on Rosneft and Novatek, Russia’s second-largest gas producer. BP plc (BP-Free Report), the largest foreign investor in Russia with a stake of about 20% in Rosneft – Russia’s largest oil producer – cautioned last month that the sanctions could adversely affect its business.

Schlumberger too expects its third-quarter profit to be hurt by about 3 cents per share. According to Thomson Reuters, analysts project earnings of $1.51 per share for the quarter ending Sep 2014.

Schlumberger, which drills on the island of Sakhalin with Rosneft, generates about 4–5% of its revenues from Russia, amounting to about $2.2 billion in annual revenue, as per Simmons & Co.

However, the leading oilfield provider services said that though the sanctions were confining the engagement of people and equipment, it would be able to cater to clients in the country without major obstacles.

It was in Jul 2014 when the company announced that the sanctions were unlikely to impact its business. However, further sanctions have been announced by the EU and U.S. since then, on Russia's energy, banking and defense sectors.

Schlumberger, along with Gazprom Neft, the oil-producing arm of Russian state gas company Gazprom, is working on technology for the Bazhenov shale development project in Western Siberia.

Notably, there are no sanctions on Gazprom. Prior to the sanctions, Russia was an emerging market for the oil service industry. Oil majors such as ExxonMobil Corporation (XOM-Free Report) were planning to start drilling wells in the Russian Arctic. However, it is a different scenario now.

Schlumberger currently has a Zacks Rank #3 (Hold). A better-ranked stock in the oil and gas sector like Sunoco Logistics Partners L.P (SXL-Free Report), sporting a Zacks Rank #1 (Strong Buy), is expected to perform better.

Williams-Sonoma Going Strong into eCommerce, Risks Persist

On Aug 12, we initiated coverage on Williams-Sonoma, Inc. (WSM-Free Report), a leading specialty retailer of home furnishing products.

However, the company depends on the U.S housing market and overall slow macroeconomic conditions.

We are encouraged by Williams-Sonoma’s strong portfolio. The company offers premium quality products and has some of the most popular brands in home furnishing, namely Williams-Sonoma, Pottery Barn, Pottery Barn Kids, West Elm, PBteen Rejuvenation and Mark and Graham. The company’s multi-brand, multi-channel format gives it’s a competitive advantage.

The company’s size gives it a scale advantage and provides the company with flexibility and leverage in marketing spend, which subsequently improves productivity and margins. Headquartered in San Francisco, CA, Williams-Sonoma’s leading position as an e-commerce retailer is also commendable.

In addition, Williams-Sonoma enjoys a strong international presence. Other than United States, the company operates retail stores in the Canada, Puerto Rico, Australia, and the United Kingdom. The company is fast expanding its international footprint in order to gain market share and drive revenues.

Williams-Sonoma has posted solid revenues and profits since late 2011 on the back of product innovation, strong international presence, personalized service and strong marketing and execution.

However, Williams-Sonoma’s products primarily focus on home furnishings. The U.S. residential activity growth has slowed down in the second half of 2013 as well as early 2014. If the housing demand worsens in future quarters, demand for WSM’s products could be hurt.

Williams-Sonoma carries a Zacks Rank #2 (Buy).

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