Why Is Halliburton Still Oppenheimer's 'Top Pick'?

In a report published Tuesday, Oppenheimer analysts maintain their Outperform rating on

. The price target has been raised from $60 to $61. The EPS estimates for the company have also been modestly increased. The company has reported its adjusted EPS significantly above the consensus, with the EBITDA and total revenues roughly in-line with the estimates. The company did not undertaken significant cost cuts during the quarter, possibly due to its impending merger with

. In fact, the analysts believe that the merger could lead to a 200-300 bps hit for Halliburton's North American margins for the current quarter as well as for FY2015. "Halliburton's frac stages were down 5% sequentially compared with a rig count decline near 30%, which implies significant market share gains. Frac pricing, in our view, is reaching a point where HAL will not continue to defend market share. Thus, we believe a bottom in frac pricing is near," the analysts said. The company's international margins are also encouraging, and the analysts believe that the consensus on these margins is "too negative" at present. Oppenheimer has raised its EPS estimates for 2015 and 2016 from $1.70 to $1.75 and from $2.85 to $2.90, respectively.