An analyst at Citi upgraded shares of RPC from a "sell" to "neutral," while increasing the bank's price target from $4.80 to $4.90 per share. Though, after today's rally, that's about 3% above the current stock price. Fueling the more optimistic view is the oilfield service company's upcoming third-quarter earnings report, which it should unveil on Wednesday morning.
On the one hand, the analyst believes that the company will report a challenging quarter while also stating that the fourth quarter will be "very weak." Those tough operating conditions, however, will likely lead RPC to announce a restructuring plan to improve its earnings. That anticipated turnaround strategy is why the analyst is more optimistic about RPC's future.
That move would follow a similar one announced by oilfield service giant Halliburton (NYSE:HAL) when it reported its third-quarter results. In Halliburton's case, it will eliminate 650 jobs in a move that will help it save about $300 million per year. That should help boost its margins in the fourth quarter.
The continued sluggishness of the oilfield service market isn't likely going away anytime soon. That's because oil supplies remain robust while demand growth seems to be slowing, which is preventing oil companies from increasing their capital spending. Those sluggish market conditions are why shares of RPC have plunged nearly 50% this year. With no rebound in sight, a major restructuring plan by RPC likely won't be enough to get its shares out of their recent doldrums.