Goldman Upgrades Oil Service Sector

The oil service sector was upgraded from neutral to attractive Tuesday by Goldman Sachs.

"We recognize that the OSX [Oil Service Index] is well off of the low but see considerable upside as we progress through the commodity driven phase of the cycle, which is likely to be driven by multiple expansion," wrote analyst Daniel Boyd. "While we are 23% below consensus EPS for 2010, we expect the stocks to look through the last leg of negative revisions as investors gain confidence in oil prices and an early 2010 trough in earnings.

"Waiting for consensus estimates to bottom would likely result in missing most of the initial 50-60% rally -- as was the case in 2002. We remain confident in our 2010 oil price forecast of $70/bbl [per barrel] and our natural gas price forecast of $6.50/MMbtu [thousand British thermal units]." ...