Halliburton cut at RBC as lack of revenue diversification a disadvantage vs. peers
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Halliburton (NYSE:HAL) -0.5% in Friday’s trading as RBC Capital downgrades shares to Sector Perform from Outperform with a $37 price target, cut from $44, saying its lower geographic and overall revenue diversification “disadvantages it in a tepid commodity macro.”
Halliburton (HAL) has made impressive recent strides in improving margins, lowering capital intensity, and boosting shareholder returns, but the stock looks less attractive compared to large-cap oilfield services peers as the global E&P cycle progresses, RBC’s Keith Mackey says.
The analyst points to North America-focused alternatives to play a potential upward inflection in U.S. D&C demand, forecasting Halliburton (HAL) revenue growth will lag by ~5% in FY 2024-26 vs. large-cap OFS peers, attributing the lower growth to its 42% revenue weighting to North America compared to a 23% average for SLB (SLB) and Baker Hughes (BKR).