Morgan Stanley sees defensive plays as key in challenging energy market

Investing.com — Morgan Stanley advised investors to favour defensive, diversified energy stocks as it lowered earnings estimates across the oilfield services and equipment sector amid a subdued macroeconomic outlook for 2025.

The firm highlighted Baker Hughes (NASDAQ:) and Chart Industries (NYSE:) as top picks on their exposure to gas markets, operational spending, digital solutions, and new energy opportunities. It also pointed to Tenaris (BIT:) as a beneficiary of rising U.S. oil country tubular goods prices and robust share buybacks.

Whereas Morgan Stanley (NYSE:) expressed caution on NOV Inc due to lower rig count forecasts and weaker maintenance spending, and on small-cap players such as ProFrac and Transocean (NYSE:) given near-term headwinds.

The brokerage maintained a preference for gas over oil, emphasizing opportunities in non-upstream oil and gas segments and nascent high-growth areas like digital and renewable energy.

Morgan Stanley expects major OFSE markets, including U.S. shale and offshore drilling, to remain flat in the near term, with growth resuming in 2026.