What do Baker Hughes Inc. (NYSE: BHI), Halliburton Co. (NYSE: HAL) and Schlumberger Ltd. (NYSE: SLB) all have in common? A key investment bank, Oppenheimer, is lowering its earnings per share (EPS) estimates and price targets on all three based on its U.S. rig count analysis. The results from the analysis point to an activity bottom in June. However, currently these companies are in the middle of one of the sharpest activity reductions in this sector within the past 30 years, which is why Oppenheimer is lowering its estimates. What seems hidden in the call is Outperform ratings that still come with big upside if the respective price targets are hit.

Amazingly, the upside projections are colossal. If Oppenheimer ends up being correct, even with the firm lowering price targets, Halliburton has upside of over 45% and Schlumberger has upside of nearly 25%.

The January projections contemplated a longer downturn owing to high levels of contracted land rigs. Note that many operators opted to pay early termination fees to react more swiftly to lower oil prices. As a result, the velocity of the downturn now gives companies little time to react and adjust their cost basis to current and expected activity levels.

Oppenheimer believes that the rapid pace of decline benefits investors because it is likely that a faster production response will be seen, potentially bringing world oil markets into balance more quickly. The firm also mentioned that there is a better than average chance for upside surprise in 2016 due to recovering oil prices and healthy incremental margins from the first half of 2015 cost-reduction measures.

James Schumm, Oppenheimer analyst, commented on the falling projections in the report:

We are projecting a sequential US rig count decline of ~28% in the first quarter which will be compounded by the negative effects of lower pricing for services. This is expected to be partially offset by a much more resilient deepwater Gulf of Mexico market in the first quarter. On average, we expect Big Three revenues will be down 27% to 32% with further 14% to 18% reductions in the second quarter. There is no change to our Weatherford estimates since they reported later in February (better visibility). Given the speed of the decline, we now see North American activity and margins bottoming in the second and third quarter versus our earlier expectation of a second half of 2015 trough.

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Looking back at the previous two down cycles, in 2001 and 2008, they hit a bottom after 38 and 39 weeks of declines, respectively. A similar time frame from this cycle is expected, which, if correct, would put the trough at roughly 900 rigs at some time in June. Schumm further detailed that, because stocks usually bottom six months ahead of the rig count, he believes the bottom is in.

As for the companies, their estimates across the board were lowered, reflecting the report.

Halliburton had its 2015 estimate lowered to $1.70 from $2.70, as well as its 2016 estimate to $2.85 from $4.00. Halliburton’s price target was moved down to $60 from $64. Halliburton shares were flat early Thursday at $41.22. The stock has a consensus analyst price target of $48.07 and a 52-week trading range of $37.21 to $74.33.

Schlumberger saw its 2015 estimate lowered to $3.35 from $4.25, and its 2016 estimate to $4.4 from $5.50. Its price target was moved down to $101 from $110, compared to the consensus analyst price target of $93.80. Shares were flat on the day at $81.15, in a 52-week trading range of $75.60 to $118.76.

Baker Hughes had its 2015 estimate lowered to $1.75 from $2.50 and its 2016 estimate lowered to $2.60 from $3.40. The price target fell $2 to $58, compared to a consensus price target of $69.50. Approaching midday on Thursday, shares of Baker Hughes were relatively flat at $60.05, in a 52-week trading range of $47.51 to $75.64.

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