Halliburton Company (HAL.N): Impressive International Growth; Now Margins Need to Follow

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Halliburton Company (HAL.N): Impressive International Growth; Now Margins Need to Follow

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22 Jul 2026 01:46:37 ET │ 12 pages

Halliburton Company (HAL.N)

Impressive International Growth; Now Margins Need to Follow

CITI'S TAKE

The bar was elevated for HAL entering 2q so the disappointing guidance in

3q was met with a harsh reaction. With less beta to the domestic recovery

than anticipated, we don’t think NAM will drive the stock narrative near term Buy

as 4q is seasonally weak and there’s risk of lower crude prices weighing on Short-Term View: Upside, expires 13-AUG-26

activity in 2027. Thus, International must carry the investment narrative.

Price (21 Jul 26 16:00) US$33.19Here we have more hope as fading start-up costs, an improving Middle East

into 2027 and continued share gains driving scale benefits should coalesce Target price US$44.00↓

to drive margins higher. In fact, we now incorporate weaker U.S. activity over from US$52.002027 and still see $4.65B of EBITDA next year and $2.68B of FCF. The stock

is trading at ~6.5x our 2027 EBITDA, ~1x below normal, and ~10% FCF yield. Expected share price return 32.6%

Thus the stock still presents good value but convincing the market that Expected dividend yield 2.1%

healthy margin improvement abroad lies ahead appears key. Expected total return 34.7%

Market Cap US$27,727MModel Update — We reduce our 3q EBITDA by 6% to $1.04B and 4q by 5% to $1.06B

reflecting a combination of lower N. American revenues as frac fleets transition

abroad as well as weaker D&E margins. Our full-year 2026 EBITDA forecast is now

$4.14B, just above FactSet consensus at $4.1B. We now incorporate a falling U.S. rig

count in 2027 with next year’s profile almost an inverse of 2026 with a forecast of Price Performance