Bernstein Believes Halliburton Tender Offer Demonstrates More Confidence by Mgmt to Manage Spill Liabilities

Halliburton HAL shares remain undervalued and should be priced at $54.60, according to Bernstein's Scott Gruber in a research note from Friday morning. The analyst's model is based on 14x 2014 EPS forecast of $3.90. This $54.60 value is 11 percent higher than the upper end of the $42.60-$48.50 per share range of Halliburton's recent dutch auction. Gruber believes the tender offer signifies Halliburton's confidence related to the end-market's demand for Halliburton shares and allows for greater share repurchase “power” compared to simply waiting for shares to appreciate. Gruber also noted the tender offer indicates Halliburton is “more confident” that its Gulf oil liability is “manageable." Gruber maintains his Market Perform rating and $54 price target on Halliburton, indicating a 15 percent further potential upside amid Friday's 4 percent intraday gain.