HAL Beats on Q2 Earnings; Shares Soar 3.7%

Halliburton Company (HAL) reported stronger-than-expected Q2 results, topping earnings estimates driven by robust top-line and margin performance. Shares of the world’s largest provider of products and services to the energy industry gained 3.7% on July 20 to close at $20.07.

The company reported adjusted earnings of $0.26 per share, beating analysts’ expectations of $0.23 per share. However, revenues of $3.71 billion were a little short of the consensus estimate of $3.74 billion. The company reported a loss of $1.91 per share in the prior-year period.

Total revenues grew 7% on a sequential basis driven by growth in both U.S. and international markets while margin expansion was seen in both segments.

The company reported an operating profit of $434 million versus an operating loss of $1.9 billion reported last year.

Notably, the Completion and Production division recorded its highest margins over the past three years.  (See HAL stock charts on TipRanks)

Halliburton’s CEO Jeff Miller commented, “The positive activity momentum we see in North America and international markets today, combined with our expectations for future customer demand, gives us conviction for an unfolding multi-year upcycle.”

He further added, “Halliburton’s value proposition, unique exposure to both international and North America markets, and differentiated technologies across an integrated services portfolio solidify our sustainable competitive advantage, and deliver strong free cash flow and industry-leading returns.”

Following the strong Q2 results, Stifel Nicolaus analyst Stephen Gengaro increased the price target on the stock from $26 to $28 (39.5% upside potential) and reiterated a Buy rating.

Gengaro said, “The margin upside was mainly fueled by costs cuts and rising activity, and we do expect prices to trend higher in 2H21 and 2022.”

Consensus among analysts is a Moderate Buy based on 6 Buys and 4 Holds. The average Halliburton price target of $26.06 implies 29.9% upside potential to current levels.

HAL scores a 9 out of 10 on TipRanks’ Smart Score rating system, indicating that the stock has strong potential to outperform market expectations.

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