Halliburton-On the rise? Message Board

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

HAL 26.84

-0.4%

Oct 31 9:30 AM EDT

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From: Dennis Roth	6/18/2007 7:44:06 AM
	of 153

Downgrading Halliburton to Neutral June 18, 2007 Goldman Sachs What happened We are downgrading Halliburton to Neutral and removing it from the Americas Investment Buy List. Our 12-month price target of $39 (11.8x 2008 EV/DACF) from $38 implies 7% upside potential. Since being added to the Americas Investment Buy List on March 28, 2006, Halliburton’s shares are down 0.6% versus a 28.6% gain for the OSX and a 18.5% rise in the S&P 500. Over the last 12 months, Halliburton’s shares are down 2.2%, the OSX is up 31.7%, and the S&P 500 is up 22%. Current view Even though Halliburton's valuation is low, we do not see near term catalysts given our cautious view of natural gas and the fact that there is significant additional pressure pumping capacity coming to the market in an environment of flattish activity. The fact that valuation is low, FCF is strong, balance sheet is unleveraged with a lot of optionality, and that the company has an increasing international exposure should provide a floor for the stock and also support our Neutral rating. Key risks include: (1) Further deterioration of the Pressure Pumping market in North America; (2) A U.S./Global recession could result in weaker commodity prices and further E&P capex cuts; and (3) Weakness in natural gas prices could lead to E&P capex cuts in North America.

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