We expect oilfield service stocks to continue to outperform in 2023 and beyond based on supportive oil price fundamentals, rising capex levels amongst E&Ps, and pricing power leading to margin expansion
Despite the sector’s strong fundamental tailwinds and the probability for a multi-year commodity supercycle, oilfield service companies are still trading at trough-level multiples In order to end the oil supply deficit, additional rigs are required to be deployed; providing organic growth and pricing power for oilfield service names.
This will create another year of margin expansion for oilfield service stocks as they take advantage of operating leverage.
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