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Halliburton hits all-time highs as Q1 beats estimates, Q2 looks even better

  • Halliburton (HAL +3.2%) shares hit an all-time high as investors look past weather-afflicted Q1 North American profit margins to focus on the company's sunny Q2 forecast of 25% higher earnings with further increases to follow.
  • HAL is more dependent on U.S. operations than rival Schlumberger (SLB +1.8%), and a surplus of fracking equipment in the U.S. has driven down prices, but CEO David Lesar said in today's earnings call that growing demand in the Permian basin around Texas is helping to tighten that extra fracking capacity faster than expected; he says HAL won't have any problem filling its fracking calendar through the end of the year.
  • For Q2, HAL expects low double-digit percentage revenue improvement and margins to move solidly into the mid-teens.
  • HAL is reiterated a Conviction Buy at Goldman Sachs, citing better than expected Q1 North American pressure pumping revenues that showed 2% Q/Q growth despite weather interruptions and its view toward strong revenue growth during the remainder of the year.
  • HAL makes up a hefty 11.9% of the Market Vectors Oil Service ETF (OIH +1.2%) and 10.4% of the iShares U.S. Oil Equipment & Services ETF (IEZ +1.1%).
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