On Thursday, Benchmark analyst Kurt Hallead adjusted Halliburton’s (NYSE:HAL) price target, reducing it to $35 from the prior $40, while still maintaining a Buy rating on the shares. According to InvestingPro analysis, Halliburton appears undervalued at its current price of $28.55, with a P/E ratio of 10.11x and strong financial health score of 3.09. The revision comes as Halliburton’s management revised its 2025 outlook, indicating that revenue and EBITDA are expected to be 1% and 5% below the consensus, respectively, though the company’s current EBITDA stands at $5.1 billion. The company anticipates challenges in Mexico and North America to pressure revenue and margins in the coming years.
Halliburton expects its Eastern Hemisphere business to grow between 3-5%, which could partially offset the lower activity in Mexico and the pricing pressures in North America. The company is also banking on new technologies in Directional Drilling, Well Intervention, and Artificial Lift, along with market growth for unconventionals, to potentially boost revenues by $2.5-3 billion above the current baseline run rate over the next 3-5 years.
The firm’s strong free cash flow (FCF) is projected to support shareholder allocations of at least $1.6 billion, aligning with the figures from 2024. Notably, InvestingPro data shows Halliburton has maintained dividend payments for 54 consecutive years, currently offering a 2.39% yield. For deeper insights into Halliburton’s financial health and future prospects, investors can access comprehensive Pro Research Reports available on InvestingPro, covering over 1,400 US equities. Despite the expected decline in North America revenue by low to mid-single digits compared to 2024, this performance is anticipated to be consistent with the second half of 2024 and market expectations. Halliburton is also excited about the distributed power opportunity, which aligns well with their business model and promises a favorable growth profile.
Hallead noted that the company’s Completion & Production (C&P) Revenue and Margins, which are largely driven by US fracturing operations, are estimated to decrease by 2.5% and 250 basis points, respectively. The downward pressure on margins is attributed to lower pricing in the US. However, Halliburton’s US fracturing fleet is reported to be 90% committed for the next year, with electric fleets expected to constitute half of the company’s US fleet by the end of 2025.
For international markets, the outlook is anticipated to remain flat compared to 2024, with lower activity in Mexico being balanced by growth in the Eastern Hemisphere. With current revenue of $23.07 billion and a market cap of $25.04 billion, InvestingPro subscribers have access to additional valuable metrics and 8 more ProTips that could help evaluate Halliburton’s international growth potential. Approximately 60% of Halliburton’s revenue comes from international sources, with half of that tied to offshore drilling programs. This international outlook is consistent with what has been reported by peers in the industry. The Drilling and Evaluation (D&E) segment’s Revenue and Margins are also expected to run flat versus 2024, benefiting from the company’s strong presence in offshore markets and Saudi unconventional gas, which should help counterbalance the anticipated lower activity in Mexico.
In other recent news, Halliburton has been the focus of several analyst adjustments. Stifel has reduced its price target for Halliburton to $37, citing challenges in Mexico impacting international revenue growth and margin pressures in the Completion and Production segment. However, Stifel remains confident in Halliburton’s long-term growth prospects, particularly due to its robust product portfolio and diverse geographical presence.
Goldman Sachs also adjusted its outlook on Halliburton, reducing the price target to $34. Despite this, the firm highlighted Halliburton’s dedication to technological innovation, which it believes will strengthen the company’s competitive edge.
JPMorgan, on the other hand, raised its price target for Halliburton to $35, emphasizing the company’s strong operational efficiency and potential for growth through technological advancements. Barclays (LON:BARC) and Evercore ISI both reduced their price targets for Halliburton to $30 and $34, respectively, due to concerns about a slowdown in North America and Halliburton’s 2025 guidance.
Despite these varying outlooks, all firms emphasized Halliburton’s strong financial health and potential for future growth. These are recent developments that investors should keep an eye on.
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