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An update has just come out today on Halliburton Company (HAL), in which Zacks oil industry analyst Sheraz A. Mian maintains his Buy rating on the company. We excerpted the following details:
'The KBR Inc. (KBR) spin-off and an increased push into the Eastern Hemisphere through a headquarters in Dubai are both positive developments. The spin-off of the high-volume, low-margin KBR business removes distractions and improves operational focus.
'Halliburton is a pure-play on the oilfield service market. We believe this will aid valuation by narrowing down, if not altogether eliminating, its valuation discount relative to Schlumberger (SLB) and other large-cap peers.
'Our Buy recommendation remains unchanged as we continue to view Halliburton as a core oilfield service holding. Despite some recent gains, Halliburton shares continue to trade at a significant valuation discount to its peer group. While the company, no doubt, has substantial exposure to North American natural gas through its market-leading pressure-pumping business, its international leverage and presence appear to be under-appreciated.
'The award of a major multi-year Saudi Aramco project highlights the strength of its international relationships, which we believe will get greater attention. With the KBR separation issue behind it, the new-look Halliburton is now a pure-play energy services provider; well positioned to capitalize on growth opportunities in its global energy services business.
'Management is targeting industry-leading revenue, earnings and returns performance metrics over the next few years, highlighting the breadth and depth of the company's oilfield franchise. Our unchanged price objective of $44 is based on 2008 P/E and EV/EBITDA multiples of 14.1x and 8.8x, still below most of its large-cap peers.'
Read the full analyst report on HAL.
Read the full analyst report on SLB.
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