Citi maintains Buy on Halliburton stock with $33 target

Wednesday, Citi analysts maintained a Buy rating on Halliburton (NYSE:HAL) with a steady price target of $33.00. Following Halliburton's fourth-quarter earnings report, Citi's Scott Gruber highlighted the company's EBITDA of $1.24 billion, which surpassed both Citi's and the consensus estimates by 3%. Halliburton's revenue matched expectations at $5.61 billion, while their EBITDA margin, excluding SAP migration costs, outperformed Citi's estimate by approximately 50 basis points and consensus by around 75 basis points. According to InvestingPro data, Halliburton maintains a strong financial health score of GREAT, with a P/E ratio of 10.32x, suggesting attractive valuation metrics. The company appears undervalued based on InvestingPro's Fair Value analysis.

The company's Completion & Production (C&P) margins were notably strong, coming in roughly 100 basis points higher than Citi's forecast. Halliburton also reported a free cash flow (FCF) of $1.1 billion, slightly above Citi's prediction by 1% and 6% higher than the consensus. During the quarter, Halliburton repurchased $309 million worth of its stock and reduced its debt by $100 million.

Halliburton's management commented on the future, noting that while they anticipate a softer market in North America in 2025, they are optimistic about their growth engines, including drilling technology, unconventionals, well intervention, and artificial lift. Citi's analysis suggests that while C&P margins may decline to near 18% by 2025, this could be balanced by steady international revenues and resilient Drilling & Evaluation (D&E) margins.

Investors are advised to watch the company's outlook on North American activities and its impact on C&P margins, as well as the expectations for international activities and their influence on D&E margins. The maintenance of Halliburton's Buy rating and price target by Citi reflects a positive view of the company's performance and future prospects.

In other recent news, Halliburton Company reported fourth-quarter earnings that met expectations, but revenue fell short of analyst projections. The oilfield services company posted adjusted earnings per share of $0.70, in line with Wall Street forecasts, but revenue reached only $5.61 billion, slightly below the consensus estimate of $5.64 billion. Halliburton's total revenue declined 2% compared to the previous quarter and 2.2% year over year, which the company attributed mainly to lower stimulation activity in North America and decreased pressure pumping services in Latin America.

Stifel analysts maintained a Buy rating for Halliburton, following the company's earnings report. The company's performance in the quarter aligned closely with Stifel's projections, with slight variations in revenue, operating income, EBITDA, and EPS. Halliburton's operations in the Eastern Hemisphere performed better than anticipated, while outcomes in Latin America were weaker than expected.

The company returned a substantial $1.6 billion to its shareholders in 2024 and is expected to continue leveraging its strong free cash flow to support both dividends and share buybacks in 2025 and beyond. Halliburton's management anticipates a sequential decline in North American revenue for 2025, which Stifel's analysis suggests could be around a 3% drop. These are some of the recent developments at Halliburton.

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