Recently, Oppenheimer’s analysts lowered their estimate of target price for Schlumberger Limited (NYSE:SLB), which is an oil service company. The share price was brought down to $101 from $110, yet, the company maintains the status of outperform.

Oppenheimer’s leading oil services analyst, James Schumm, says that this downfall was a result of overall lowered drilling activity in the U.S. A downward sloping trend in the activity was noticed in the oil service company, as many producers reduced their activities to bring down their spending. Discovery of idle rigs has also reduced the activities on part of the oil services companies. These factors explain why Schlumberger Limited (NYSE:SLB) has been declining in its activities and why the revenue for the company’s current quarter is considerably lower than the company’s last quarter. It is being predicted that revenues will further fall in the coming quarter.

However, this isn’t as bad as it sounds. It is expected that the decline in the activity will stop somewhere in the mid of the year. This is due to the slight stability in the drilling activity that this sector will be able to achieve by the mid of this year. Once stability is achieved, it is expected that the market will once again bounce back up. Thus, by the end of this year an increase in oil service activity is expected.

However, analysts’ predictions should not be taken as a final verdict. There are several factors that affect the market. Predictions regarding market trends are usually based on assumptions that analysts make regarding these factors, thus, there is no surety that something is bound to happen or is not bound to happen. Thus, the price targets and ratings are mere prediction, so there is nothing serious to fret about. Stability in the market can come before the mid of the year and the share price might bounce back before it is expected. There is no reason to say right now that Schlumberger Limited (NYSE:SLB) will not see a price up soon.

Investors must not solely rely upon the Oppenheimer analysts’ report as many analysts are looking at several remote possibilities as to why the shares might not bounce back or why the company’s activity rate will not improve. The report does not gives the investors a fair idea of the fact that the company certainly has chance of improvement and the activities on its part can definitely go up.

The major reason due to which nothing definitive can be said regarding Schlumberger Limited (NYSE:SLB) is that oil in itself is a very cyclical commodity, thus, anything can happen in this market sector. Thus, instead of getting hysterical over the dropping share price, this is a good opportunity for many investors to buy some more shares. Schlumberger Limited (NYSE:SLB) has been amongst the best oil services company and the investing in it would not bring any serious disappointment. Thus, while the share prices are low, it is a perfect opportunity to invest.

The announcement came on the 15^th of this month by the company when it announced that it would be cutting over 9000 jobs from various departments of the company to make up for the losses being incurred due to the sudden and harsh decline in oil prices. Schlumberger (NYSE:SLB) is perhaps one of the largest suppliers of oil services all over the world, employing well over 123,000 employers the world over in various geographical locations.

The announcement by Schlumberger follows the release of its financial statements which the company released to the public on the same day the announcement was made. Stating the financial reports as evidence, representatives of the company highlighted the fact that Schlumberger (NYSE:SLB) incurred charges amounting to $1.77 billion in just the last quarter of 2014. Most of these charges incorporated the devaluation of the Venezuelan currency due to falling oil prices, cuts in jobs (benefits, etc.), and miscellaneous charges incurred due to the seismic activity in business.

World oil prices began to lower in the summer of 2014, have to this day have fallen by well over 50%. At that point in time per barrel price was well over $115 per barrel, however now price for the same has come down to a meager $50 per barrel, and is still lowering with each passing day. In the US, as of today, the Global Benchmark for oil is currently trading at $46.6 per barrel, whereas the Brent crude is trading the same at $48.5 at the same time.

The last decade has been wonderful for Schlumberger (NYSE:SLB), as the company more than doubled the size of its workforce during this time to accommodate to the growing needs of its expanding business structure. The company opened up operations in many parts of the world where it was not operating before. However, of course, the company could not have anticipated the sudden and harsh fall in oil prices that haunts oil companies all over the world today, and now has to lay off the same workers it had hired before, as it no longer can afford to keep them all on board.

It seems the company is being hit by a lowering of supply from the global oil supply chain, but mostly because demand for some of the core services provided by Schlumberger (NYSE:SLB) is being reduced drastically, especially for its fracking as well as drilling services, as its clients (also oil companies), simply cannot afford to invest in these services during the harsh conditions of the market, affecting the business of Schlumberger directly.