Halliburton double upgraded at Wolfe on North American capex signals; SLB cut
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Oilfield services stocks Halliburton (NYSE:HAL) and SLB (NYSE:SLB) both gain nearly 3% in Thursday's trading even as Wolfe Research double upgraded the former to Outperform from Underperform with a $51 price target and downgraded the latter to Peer Perform from Outperform.
Wolfe believes upcoming 2023 capital budgets should yield outsized sales growth at Halliburton (HAL), driving a margin upcycle for North American oilfield services despite stagnating rig counts.
U.S. capacity constraints are beginning to translate to volume growth for Halliburton (HAL), whose finished inventories accelerated since Q1 2022 while Baker Hughes (BKR) and SLB (SLB) stayed flat.
Schlumberger's (SLB) downgrade is a relative valuation call, as the stock's premium valuation is harder to defend with catalysts now behind it.
Wolfe also sees Hess (NYSE:HES) as a long-term value idea, calling its Guyana partnership with Exxon "an asset that is highly differentiated and can't be replicated."
"Structural demand for more oil and gas provides strong tailwinds" for Halliburton (HAL), RCK Analytics writes in an analysis published on Seeking Alpha.