According to Gengaro, the Q3 beat was driven mostly by operating income improvements in North America and the Europe/Africa/CIS region.
“HAL’s results support our expectation that North America will lead the recovery and that HAL is well positioned to post strong earnings improvement in 2017-18, as well as a positive tax rate impact” Gengaro explained.
North American revenue climbed 9.4 percent sequentially, topping Loop’s forecast by 4.9 percent. Rig counts rose 14 percent on the quarter in response to higher oil prices. North American margins improved from -8.2 percent to -4.0 percent, and incremental margins came in at 41 percent.
Halliburton’s balance sheet also underwent some significant improvements in Q3. The company generated more than $1.0 billion in cash flow. As a result, total debt dropped by $600 million while the company's cash balance rose by $181 million.
Halliburton management expects a steady rise in rig counts will continue to drive long-term North American growth.
Loop has a $53 price target for Halliburton’s stock.
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|Oct 2016||Cowen & Co.||Maintains||Market Perform|
|Oct 2016||DA Davidson||Maintains||Buy|
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