Halliburton (HAL): International Growth Strong and Expanding International Margins On The Way

Last week, Bank of America met with Halliburton (HAL) CFO Mark McCollum. The meeting reaffirmed the bank’s belief that the stock’s current price provides an excellent entry point:

While natural gas price concerns may be a headwind, we expect Halliburton’s valuation discount to its peers to narrow as international growth exceeds expectations and bifurcation in the pressure pumping business becomes more apparent. An international acquisition could expedite the narrowing of the valuation gap.

Specifically, BofA believes HAL is not seeing any reaction to lower commodity prices at this time. In fact, they think international margins have room to grow through integrated project management:

Integrated project management – defined as delivering a completed well at a fixed price – accounts for <5% of revenues, but could grow to more than 10% in coming years given customer demand. IPM and bundled services margins are generally comparable to those of traditional work, but offer
upside through execution and opportunities to up-sell technology.

Bank of America reiterates BUY on Halliburton (HAL), target $60.

See Also:
Halliburton (HAL): JP Morgan Explains Why Stock Collapsed, Says It’s a Buy
Halliburton (HAL), Oil Services To See More M&A, Pick Your Takeover Candidates (NOV, CAM, SLB, RIG)
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