Why Halliburton Company (NYSE:HAL) Appears Attractive Despite Downgrade From Oppenheimer?

The research firm, Oppenheimer, has spelled out some trouble for the oilfield services company, Halliburton Company (NYSE:HAL). The research firm has maintained an ‘Outperform’ rating on the stock but has cut down the price target to $60 from $64 on it. The research firm noted that the company is nearing one of the steepest activity reductions that the sector has witnessed over the last 30 years.

Do analyst foresee a double-top for HAL?

Steep decline means early revival

However, there is some relief to the investors of Halliburton Company (NYSE:HAL) as well. The firm views that the steep fall in activity decline will benefit investors. It supported the view stating that such sharp fall in activity will bring the oil markets across the globe in balance sooner than later. Oppenheimer anticipates that the chances of an upside are brilliant in 2016 as oil prices tend to recover, while healthy incremental margins will also add up due to cost control measures adopted in 2015.

Already near low-levels

The research firm has also revised earnings per share estimate on Halliburton Company (NYSE:HAL), while it trimmed the price target to $60. The revised estimates are cut down to $1.70 from $2.70 per share. Despite the price target cut, the newly revised price target signifies 50% upside on Halliburton Company (NYSE:HAL)’s stock. In its note, Oppenheimer said that the rig count of the company will decrease by as much as 28% this quarter as against the previous quarter. As a result, the North American revenues of the company will also decline in the range of 27%-32%. Following the decline in rig count, Oppenheimer estimates that the drilling activity of Halliburton Company (NYSE:HAL) will touch the lower in the second or third quarter of the year. However, the same is expected to tick up in 2016.

Since the downturn in the market value of oilfield services company tends to happen in advance, therefore, according to Oppenheimer, the stock of Halliburton Company (NYSE:HAL) is already on the lower side. The company settled the last trading session down by 1.98% to $40.18.


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Erica is a graduate of New York University's school of Journalism. She joined US Markets Daily as a general assignment reporter in January of 2008.