FBR Capital Reiterates Outperform on Halliburton Company (HAL) Following Strong 2Q Results

By Ben Kriegsman

FBR Capital analyst, Thomas Curran, reiterates an Outperform rating on Halliburton Company (NYSE:HAL), following the company’s 2Q earnings report.

The analyst notes that HAL reported EPS of $0.14, beating consensus estimates of $0.19 due to higher EBIT and lower taxes.

Curran explains, “Despite both beating for 2Q and indicating that the NAM upcycle has begun, HAL saw its stock fall 1.6% (versus a flat OSX) as we think some were disappointed, for the NAM division, by management’s 3Q16 guidance for quarter-over-quarter margin improvement (100-200 bps) and refusal to quantify its longer-term expectations for pricing.”

However, the analyst came away with hindered confidence due to his thesis assuming that margins would rebound slowly “on a combination of share gains, technology traction, efficiency initiatives, and, eventually, net pricing.”

The analyst notes, “HAL not only delivered incremental support for those first three margin ingredients (e.g. Q10 conversion hit 70%), but also shared a frac demand intensity outlook that led us to raise our industry utilization trajectory and, thus, HAL estimates.”

The analyst sets a price target of $53.00 for HAL.

According to TipRanks, HAL is rated as a Strong Buy, overall, with a consensus price target of $49.29, marking an 11.31% upside from current prices.