Halliburton-On the rise? Message Board

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

HAL 28.16

-0.1%

3:59 PM EST

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To: Dennis Roth who wrote (144)	5/30/2008 8:56:06 AM
From: Dennis Roth	of 153

Halliburton Company (HAL) Buy: Reiterate Conviction Buy rating on HAL; raising price target to $56 - Goldman Sachs - May 30, 2008 Source of opportunity We reiterate our Buy rating on Halliburton and raise our 12-month price target to $56 from $52, which implies 15% potential upside from current levels. Given its valuation discount to peers (13.3X 2009E EPS vs. peers at 15.3X) yet similar EPS growth, we believe HAL is the most attractive way to take advantage of a robust US natural gas drilling environment, recent bullish national oil company spending announcements, and increased upcoming offshore drilling activity. Our price target revision reflects a 3% increase in our 2009 EPS estimate to $3.65 and a slight increase in our target multiple to 15.2X—in line with the average peer target multiple. Catalyst (1) This week, the US natural gas rig count was bullish, up 1.5% week over week; we think this is the beginning of what should be a steady ramp in drilling activity throughout the remainder of 2008 and into 2009. HAL is among the most-exposed large-cap services companies to North America and should be one of the biggest beneficiaries of this growth. (2) The mix shift toward more service-intensive horizontal rig activity has been occurring at a robust pace in 2Q. This should continue and be an upside catalyst for stimulation activity in 2H2008, which benefits HAL and BJS. We also raise our 12-month BJS price target to $29 (from $26) to reflect this positive view (BJS target multiple of 13.5X). (3) Three national oil companies recently provided bullish long-term spending forecasts. HAL is the second-largest international services company. Valuation HAL trades at 13.3X 2009 EPS, which is a discount to its peer average of 15.3X despite similar expected EPS growth of 27% vs. 24%. We raise our 2008/2009/2010 EPS estimates by 1%/3%/1% to $2.88/$3.65/$4.32. Key risks Higher-than-expected stimulation capacity additions or a sustained decline in commodity prices are key risks to our price targets.

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