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Halliburton Company (NYSE:HAL) reported third-quarter results that came in above expectations, reflecting stronger execution and improved cost efficiency.
RBC Capital Markets analysts led by Keith Mackey upgraded Halliburton to Outperform from Sector Perform and raised their price forecast to $31 from $26, citing strong third-quarter 2025 results.
The firm said its previous neutral stance has played out, noting that consensus estimates have reset lower, management's focus on returns is driving better capital efficiency, and new international power generation projects could act as catalysts in the quarters ahead.
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RBC said its prior neutral view had run its course after earnings estimate revisions and a valuation cut from 7.5x to 6.5x, based on 2025–2026 EBITDA forecasts of $5.6 billion and $6.0 billion.
The analysts now apply a 7.5x multiple to their updated 2026 EBITDA forecast of $4.1 billion, which supports the upgrade to Outperform based on an improved risk-reward outlook.
RBC said Halliburton's focus on returns is paying off, with quarterly costs reduced by about $100 million through operational optimization and adjusting headcount. Capital spending is projected to drop 30% in 2026 to $1 billion, or 4.8% of revenue, versus an average 6% from 2023-2025.
RBC highlighted Halliburton's partnership with VoltaGrid as a new growth catalyst, targeting distributed power solutions for data centres, specifically in the Middle East. The bank noted that Halliburton's 20% stake and project involvement could enhance the stock's performance potential.
RBC projects Halliburton's 2026 free cash flow at $1.8 billion, up 4% year-over-year, implying a 9% yield versus a 5% long-term average. The firm expects shareholder returns of 91% in 2025 and 75% in 2026, noting they remain in line with peers despite reduced buybacks.
RBC now projects 2025 revenue of $21.94 billion, up 2% from prior estimates, and 2026 revenue of $21.67 billion, 4% higher than the previous estimate. EBITDA forecasts were raised by 5% for 2025 and 2026, to $4.27 billion and $4.09 billion, respectively. The analysts expect earnings to rise from $1.41 in 2025 to $2.14 in 2026.
Valuation remains attractive, the analysts added. Halliburton trades at 6.1x and 6.4x EV/EBITDA on 2025 and 2026 estimates, respectively, compared with 6.9x/6.7x for SLB Limited (NYSE:SLB) and 10.1x/9.7x for Baker Hughes Company (NASDAQ:BKR). That places Halliburton below its eight-year average multiple of 7.3x.
RBC's new $31 price forecast reflects a 7.5x multiple on 2026 estimated EBITDA, up from 7.0x previously, citing improved margins and stronger growth prospects. The firm said the revised target implies a 12-month total return of 26%, which aligns with its Outperform rating across the coverage group.
Halliburton expects a negative impact of about $60 million in the fourth quarter of 2025 from higher input costs related to U.S. Section 232 tariffs, analysts noted.
Price Action: HAL shares were trading higher by 2.91% to $25.98 at last check Wednesday.
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