FMC Technologies, Inc. (NYSE:FTI) — Superior management style and increased cost efficiencies by FMC Technologies will most likely continue to attract drillers’ orders from deep-water drilling companies.
Those efficiencies are projected by Standard & Poor’s to accelerate in 2017 from a pending merger with former European rival, the French company Technip. Since there appears little actual competitive overlap between the two companies, the deal is expected to proceed without major antitrust issues. Thus S&P has raised their 2016 earnings estimate by 6 cents to $1.03 and their price target by $6 to $37, noting that the outlook for higher crude oil prices is strong.
This leading provider of oilfield services capital was last reviewed by me on Feb. 18 with a suggested buy at $25 and a target of $30. The stock has since exceeded that target, breaking a bearish resistance line in August and consolidating in a channel that terminated with a breakout at $29. The breakout was preceded by a Golden Cross (Long-term Buy), and the breakout started the formation of a new bull channel with a recent high at over $36.50.
Last week, profit-taking resulted in a pullback to under $35 where a new minor buy signal from my internal indicator, the CBR, was triggered. Thus, traders should buy FTI at $35 with a target of $40. A stop-loss order should be entered at $33.
Long-term investors who purchased FTI earlier should hold this stock for continued long-term representation in the Oil & Gas Equipment & Services sub-sector of the Energy Group.
