Halliburton Company (NYSE:HAL) is having a tough time since it has announced its intent to buy the oil services company Baker Hughes Incorporated (NYSE:BHI), especially at a huge premium. The announcement on Monday has seen a huge selloff of 12% in just two sessions and even an executive vice president of the company, Lawrence J. Pope selling 3000 shares in the open market. Though the EVP still owns 140,000 shares, the act of an insider selling hasn’t increased the confidence of the market.
Any benefit from the impending merger may be outweighed by the potential damage from revenue leakage and risk of closing for Halliburton Company (NYSE:HAL), according to a lot of analysts. Still, a few analysts are optimistic about an increase in the EPS in the coming quarters and recommending an investment in the stock.
Argus analysts have a ‘buy’ rating though the target is drastically cut to $64 from the earlier $84. Jeffries Group has cut the target too, from $74 to $67 now though the ‘buy’ rating is retained. These targets converge with the target of Deutsche Bank at $69 with the same rating as the others.
Halliburton Company (NYSE:HAL) has to overcome the huge supply coming from the investors determined to exit from the stock before it can hope for a turn around. The company is going to pay a premium of 61% to buy Baker Hughes in the $35 billion transaction, which is yet to pass the table of the Justice Department.
Technically, it is the ideal spot for the stock to stage a good bounce. Not only the entire rally from the January 2014 bottom of $47.60 to the top of $74.33 has been completely retraced, there is a huge Positive Divergence visible on the daily charts too. Going by the Elliott Wave too, it may well be the end of the 5th wave and a bounce to $56.50-$58.00 may be on the cards now.