Halliburton Will Continue To Gain Market Share

Iberia Capital’s Robert MacKenzie expects Halliburton Company (NYSE: HAL) to “continue to gain share from its competitors as the market starts to recover due to superior service quality, lower structural costs, and under-utilized active assets.”

MacKenzie maintains an Outperform rating on the company, with a price target of $50.

“HAL remains on our Conviction List and is our favorite large cap way to play the recovery in NAM completions activity,” the analyst mentioned.

With the merger now behind Halliburton, MacKenzie expects the company to focus on streamlining its infrastructure and future growth opportunities.

Regional Expectations

However, the analyst also expects the company to see a 25 percent quarter-on-quarter revenue decline in North America, with margins in the region estimated at a decline of 10.5 percent, driven by further declines in activity and pricing, partly offset by the company’s cost cutting initiatives.

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According to the Iberia Capital report, “International revenue continues to decline, driven almost entirely by LAM, where activity continues to deteriorate significantly.”

However, the Eastern Hemisphere remains fairly resilient, especially the Middle East. Revenue for the region is expected to be flat to the 1Q levels.

“Although we are expecting 3Q revenue to essentially be flat to 2Q levels, we believe there is a possibility 2Q could be the bottom for EPS for Halliburton given the significant cost cuts the company has implemented post-merger break-up,” MacKenzie added.