Benzinga | Dec 7, 2020 11:05AM EST

BofA Downgrades Helmerich & Payne On Valuation

While the recovery in oilfield services has been to the upside, Helmerich & Payne's (NYSE:HP) stock valuation appears "stretched" even with a more optimistic U.S. rig count forecast for the near term, according to BofA Securities.

The Helmerich & Payne Analyst: Chase Mulvehill downgraded Helmerich & Payne from Neutral to Underperform while raising the price target from $21 to $23.

The Helmerich & Payne Thesis: Recovering from the downturn earlier this year, the U.S. rig count has been much more robust than anticipated, Mulvehill said.

He added, however, that Helmerich & Payne's shares seem to have "gotten ahead of what we believe will be the ultimate recovery for US onshore rigs."

Despite the rise in U.S. rig count, "we still haven't changed our view on where shale activity rebounds to over the longer-term, and we still don't see the rig count rising to a level that helps margins back to prior peak levels," the analyst wrote in a note.

HP Price Action: Shares of Helmerich & Payne were trading down 0.7% at $24.75 at the time of publication Monday.