Halliburton Lowers 2024 Outlook, Analysts Forecast 'More Muted' 2025

Author: Priya Nigam | July 22, 2024 10:40am

Shares of Halliburton Company (NYSE:HAL) were tanking in early trading on Monday, after the company reported its second-quarter results.

The results came amid an exciting earnings season. Here are some key analyst takeaways.

• RBC Capital Markets analyst Keith Mackey reiterated an Outperform rating, while cutting the price target from $45 to $44.
• Piper Sandler analyst Luke Lemoine maintained an Overweight rating, while slashing the price target from $46 to $40.
• Benchmark analyst Kurt Hallead reaffirmed a Buy rating and price target of $42.

Check out other analyst stock ratings.

RBC Capital Markets: Halliburton's quarterly results were broadly in-line with expectations. Adjusted earnings came in at 80 cents per share. While adjusted EBITDA of $1.33 billion came in 1% higher than Street estimates on stronger margins in the C&P (Completion and Production) segment, free cash flows of $793 million came in "well above our $565MM estimate on WC harvest," Mackey said in a note.

The stock came under pressure on lower North America revenue guidance, "which HAL now expects to be down 6-8% for FY24," the analyst wrote. "North America revenue declines stem mostly from lower US lower-48 E&P activity," he further stated.

Piper Sandler: The stock declined after the company announced a tempered 2024 outlook for both International and North America. "Int’l is now expected to be +10% this year vs the prev guide of up low double-digits, and NA is now expected to be down 6% – 8% y/y vs the prev guide of flat to up," Lemoine said

"We believe the ’24 HAL NA outlook is very pragmatic; however, we’re still forecasting a more muted NA in ’25," the analyst further stated. The International outlook being lowered fueled investor concern around further growth deceleration in 2025, he added.

Benchmark: Despite lowering the 2024 and 2025 EBITDA estimates by an average of 6%. Hallead said the company's International momentum "continues with visible growth extending past 2025." It’s driven by "contracts for project execution in 2025 plus discussions for incremental projects that will begin after 2025."

"North America will be driven by long term growth in natural gas supply that will be needed to feed LNG exports and the electric grid for the AI/data center build out," the analyst wrote. Halliburton projected 2024 free cash flow growth of at least 10% and expects to allocate 60% of this to shareholders, "well above its long-term commitment of at least 50%," he added.

HAL Price Action: Shares of Halliburton Company had declined by 1.13% to $34.01 at the time of publication on Monday.

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