Energy Business

Analysts Getting Even More Positive on Kinder Morgan and Halliburton After Earnings

Halliburton saw numerous analysts raise their price targets. Scotia (Howard Weil) was the cautious firm — it has a Sector Perform rating, but they still raised their price target to $57 from $50.

Cowen & Co. maintained its Market Perform rating and raised its target price to $45 from $40.

Other positive calls seen on Halliburton were as follows:

Barclays reiterated its Overweight rating and raised its target price to $54 from $52.

BMO Capital Markets reiterated its Outperform rating and raised its target price to $58 from $50.

Goldman Sachs reiterated its Buy rating and raised its price target to $53 from $49.

J.P. Morgan reiterated its Overweight rating and raised its target price to $45 from $42.

Nomura reiterated its Buy rating and raised its target price to $61 from $54.

BofA Merrill Lynch reiterated its Buy rating and raised its price objective to $56.00 from $53.00 on Halliburton. They feel the trough is in the past and are prepping for the turnaround. That was based upon an unchanged 11 times multiple on a higher 2018 estimated EBITDA. They believe exit-2018 estimates reflects a more sustainable rig environment. Halliburton is well positioned for an inevitable and robust U.S. land rebound and the firm expects consensus estimates to rise. Merrill Lynch’s investment rationale said:

Halliburton’s higher North American exposure leave it well positioned for the recovery of drilling and completion activity we expect in the second half of 2016. Halliburton shares typically outperform peers during an oilfield activity recovery, which we expect will continue as drilling activity improves.

24/7 Wall St. wanted to include the corporate commentary here as well. After all, it is important to see if a company is talking itself up as much as the investors are.

Dave Lesar, Chairman and CEO of Halliburton, had a lot to say. He was a bit cautious on the international business, while Latin America was down and its Eastern Hemisphere business was down. Just two of his eight quoted paragraphs said:

I am pleased with our third quarter results given the devastation our industry has faced over the last two years. These results reflect the hard work and determination of our organization. While the recent cycle has provided its fair share of challenges, we out-executed even against the very high expectations we place on our organization.

Globally, we will continue to expand our portfolio in unconventionals, mature fields and deepwater. We believe the underlying fundamentals driving our industry are strengthening, and I am optimistic about Halliburton’s relative performance as we move into the new year.

Richard Kinder, executive chairman of Kinder Morgan, said:

During the quarter, we substantially reduced our debt, further positioning Kinder Morgan for long-term value creation. We are ahead of our plan for 2016 year-end leverage and we’re pleased with the progress toward reaching our targeted leverage level of around 5.0 times net debt-to-Adjusted EBITDA. This will position us to return substantial value to shareholders through some combination of dividend increases, share repurchases, additional attractive growth projects or further debt reduction.

Additionally, we are pleased with our operational performance for the quarter despite continued weak market conditions in our industry. Our performance, adjusted for the SNG transaction, remains consistent with our guidance provided since April. We remain on track to generate full year 2016 distributable cash flow in excess of our expected dividends and our expected growth capital expenditures, eliminating our need to access the capital markets to fund growth projects in 2016. Moreover, given our continued efforts to high-grade our backlog, we do not expect to need to access the capital markets to fund our growth projects for the foreseeable future beyond 2016.

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