Halliburton Company (HAL) posted solid second-quarter 2008 results, reflecting contribution from all product service lines driven by increased international activity and strengthening demand in the U.S. International revenue, which was up 26% year-over-year, exceeded the 20% growth target.
The company expects robust international growth to continue throughout the second half and into 2009, driven by introduction of new technology, reliability of execution and solid project visibility. The outlook for the domestic market has significantly improved, with the management expecting improved pricing leverage going forward. Our Buy recommendation remains unchanged as we continue to view Halliburton as a core oilfield service holding.
Halliburton has a strong international oilfield presence, with the oil-rich Eastern Hemisphere becoming its fastest growing segment. The recent decision to open its headquarters in Dubai highlights the significance of the region to the company. The continued valuation discount for Halliburton shares, compared to its peers, reflects investors' concerns about the company's natural gas exposure through its North American pressure pumping business.
But Halliburton is much more than pressure pumping. It is among the top three players in each of the product/service markets in which it competes. Also, North American land operations are showing signs of improvement. Continued strength in oilfield demand is helping Halliburton institute price increases, which is helping the company expand margins.
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.
Read the full analyst report on HAL
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