Halliburton-On the rise? Message Board

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Gold/Mining/Energy : Halliburton-On the rise?

HAL 26.85

-0.4%

3:59 PM EDT

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From: Dennis Roth	4/27/2007 9:13:07 AM
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Raising 2007 estimates, price target – Still Buy April 27, 2007 Goldman Sachs What's changed We raised our 2007/2008/2009 estimates by $0.18/$0.02/$0.03 to $2.12/$2.50/$2.85. Halliburton’s operating performance from continuing operations (i.e., ex- KBR) was better than we feared based on the company’s negative preannouncement, which led us to raise our estimates. We also raised our 12-month price target by $3 to $38 (=13.8x 2007 EV/DACF) due to lower taxes and higher estimates, which implies 20% upside. Implications We maintain our Buy rating for Halliburton. In our view, Halliburton’s valuation discount to peers is exaggerated because of North American Pressure Pumping concerns, while the company does not get enough credit for its strong international franchise. We estimate that Halliburton will derive 54% of revenues from international markets in 2007. Valuation Halliburton is trading at a 2007 P-E/EV-DACF of 11.7x/14.9x versus Schlumberger’s 14.5x/19.2x and Baker Hughes’ 12.1x/16.4x. Key risks Key risks to our thesis include: (1) A U.S./Global recession could result in weaker commodity prices and further E&P capex cuts; and (2) Weakness in natural gas prices could lead to further E&P capex cuts in North America.

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