Johnson Rice Thinks Halliburton's Earnings Have Bottomed Out

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Johnson Rice & Co provided its outlook on Halliburton Company HAL, stating the company's earnings have bottomed. According to the analysts, Halliburton provided what the market anticipated with its Q216 earnings release: "a declaration that HAL's earnings and NAm results troughed in Q2."

"We see evidence of the strength of HAL's NAm completions franchise in both activity metrics (stage count down just 33 percent from peak) and revenue measures (NAm revenue has outperformed the q-o-q domestic land rig count trend by an average of ~900 bps in Q1/Q216)," wrote the analysts, noting they continue to favor the company for its execution strength and leverage to the NAm market.

The analyst believe the completion market will tighten more quickly than rig capacity; This is already accepted by the market, and also supported by the company's recurring comments noting a more modest decline in pumping stage count (now down 33 percent from peak) than rig count (troughed nearly 80 percent below peak).

They expect the U.S. land rig count to reach 800 rigs by end Q417, suggestive of steady strengthening in Halliburton's completions franchise over the forward period.

Johnson Rice has an Accumulate rating on the stock.

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Posted In: Analyst ColorAnalyst RatingsJohnson Rice
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