UPDATE: Morgan Stanley Upgrades Halliburton to Overweight

Morgan Stanley is out with its report today on Halliburton (NYSE: HAL), upgrading HAL to Overweight.

In a note to clients, Morgan Stanley writes, "HAL has historically traded at a P/E discount vs. its major peers due to its outsized exposure to NAm (70% of 2011e earnings vs. 52% for its peers), which has historically been characterized by short cycles driven by natural gas price volatility. However, following the recent surge in US oil drilling activity driven by technology and strong crude prices, HAL's earnings should become smoother and less volatile than over the last two decades, resulting in multiple expansion relative to its peers."

Morgan Stanley maintains an $85 PT on HAL.

At the time of posting, shares of HAL were trading pre-market at $48.51, up 2.13% from Tuesday's close.