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Shares in Schlumberger (SLB - Get Report)   rose Tuesday after shares of the world's largest oilfield services company were upgraded by a Morgan Stanley analyst.

Schlumberger rose 4.02% to $37.69 following Morgan Stanley analyst Connor Lynagh's upgrade to overweight from equal-weight with a price target of $51.

He offered three factors for the improved upgrade:

  • Enhanced focus on returns and free cash flow under new CEO Oliver Le Peuch, who joined the company Aug. 1
  • Global capital expenditure dynamics favoring international exposure
  • Downside support via dividend, noting that he thinks the current dividend is sustainable "in all but the worst oilfield market scenarios"

In his upgrade message, Lynagh described Schlumberger's risk-reward as the most compelling it has been in years.

The company reported a 14.4% increase in quarterly profit for the second quarter, which ended in June, as demand in international markets helped it counter weakness in North America. Net income rose to $492 million, or 35 cents a share, from $430 million, or 31 cents a share, a year earlier.

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