Morgan Stanley: Downturn May Help Halliburton Overcome Antitrust Hurdles

Morgan Stanley on Wednesday commented on the Halliburton Company HAL and Baker Hughes Incorporated BHI merger.

Regarding the proposed merger between the two oil companies analysts at Morgan Stanley wrote, “We believe that the downturn may help HAL overcome antitrust hurdles, as weak oil prices push the US service market from highly utilized to overcapacity, making it harder to argue that market share power will translate into pricing power.”

Morgan Stanley also discussed how the current downturn in the oil industry will lead to consolidation as oil companies will look to cut any operational inefficiencies as they fight to stay profitable: “The weaker market is also likely to increase the value of the $2bn in cost synergies HAL expects to achieve from the transaction, given its much more depressed earnings figures.”

While the firm lowered earnings estimates for Halliburton, Morgan Stanley maintained their valuation of $50 per share.

Shares of Halliburton recently traded at $40.48, up 1.6 percent.