The Fly

Halliburton should take equity stake in Chart Industries, says Citi

Citi analyst Scott Gruber lowered the firm’s price target on Chart Industries (GTLS) to $170 from $196 and keeps a Buy rating on the shares. Chart "has a great new energy strategy," but needs cash to fund the recently announced $4.4B acquisition of Howden, Gruber tells investors in a research note. Halliburton (HAL) has a cash pile of $2B and is set to generate more, but "would benefit from a more compelling new energy strategy," says the analyst. As such, he argues that Halliburton should provide funding for Chart’s Howden deal in exchange for a stake in the new company. Halliburton would be investing in a company at eight-times estimated 2024 EBITDA, well below the 14-times pre-pandemic level, while enhancing its new energy strategy with future optionality, says Gruber. The analyst updated Chart’s target to reflect the deal. He believes the company can source a portion of the requisite funds from a strategic investor, "even potentially beyond" Halliburton, easing its financing burden.

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