On Friday, Halliburton (NYSE:HAL) shares received a continued vote of confidence from Evercore ISI, as the firm reiterated its Outperform rating and a $52.00 price target for the oilfield services company. The endorsement follows Halliburton's second-quarter financial results, which revealed several key points indicative of the company's robust performance and strategic execution.
The company reported operating income of approximately $1.03 billion for the quarter, marking a 5% sequential increase. Without the $29 million expense for the ongoing SAP upgrade, the operating income would have reached $1.06 billion. This figure is in close proximity to Evercore ISI's projection of $1.08 billion and slightly above the consensus estimate of $1.05 billion. Halliburton's focus on returns was evident in these results.
Halliburton also showcased substantial free cash flow (FCF) generation, approximately $800 million, surpassing the consensus estimate of $606 million. Additionally, the company continued its shareholder-friendly actions by repurchasing $250 million of shares during the quarter, a trend it suggests will persist as a benchmark for future expectations.
The Completion & Production (C&P) segment of Halliburton saw its operating income margin rise to 21.3%, up from 20.4% in the first quarter of 2024 and 20.3% in the second quarter of 2023. The improvement was attributed to a better activity mix, despite C&P revenue remaining flat sequentially.
The Drilling & Evaluation (D&E) segment's operating income stood at $403 million, consistent with the previous quarter and demonstrating a 7% year-over-year increase. The segment margin reached 16.6%, slightly below Evercore ISI's estimate of 16.9%.
In terms of geographical performance, Halliburton experienced a 3% sequential decline in North American revenue, impacted by decreased pressure pumping services in U.S. land and lower activity in the Gulf of Mexico.
Conversely, international revenue climbed by 3% sequentially and 8% year-over-year, with notable increases in Europe, Africa, and the Middle East/Asia regions. Latin America revenue remained unchanged from the previous quarter. Attention is expected to turn towards expectations for the North American market in the second half of 2024 and into 2025.
In other recent news, Halliburton reported its second-quarter earnings per share (EPS) at $0.80, slightly exceeding Citi's prediction and meeting consensus estimates. However, the company's revenue of $5.83 billion fell short of expectations, a shortfall attributed to the North American market. Halliburton's free cash flow for the quarter was notably strong at $793 million, exceeding both Citi's and consensus estimates.
Analyst firms have adjusted their outlooks for Halliburton, with Stifel reducing its price target for the company's shares, citing anticipated growth in U.S. profitability. BofA Securities has also lowered its price target, based on an updated discounted cash flow valuation, while Citi has reduced its second quarter revenue and EBITDA estimates for Halliburton. However, JPMorgan (NYSE:JPM) has maintained its Overweight rating on the company.
Halliburton's recent developments include securing a contract for deep-water well constructions in Namibia, expected to unlock potential in the region's oil and gas sector. The company's second quarter net income reached $709 million, with steady international client demand offsetting a slight decline in North American revenue. These developments and financial results highlight Halliburton's recent performance in the market.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.