A Bounce for Halliburton Shares!

Making A Move – Earnings Due Monday, July 24, 2017

July 21, 2017

** OPTION TRADE: Buy the HAL AUG 18 2017 45.000 CALL at approximately $1.60. Place a pre-determined sell at $3.20.

Note: Add a protective stop loss of $0.65.

Also Note: This is a recommendation and investors/traders can use their own discretion as to when to enter or exit! As well, it is advisable to do further research and due diligence before executing your trade.

by Ian Harvey

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U.S. oilfield service companies' second-quarter earnings should easily top last year's depressed results. This improvement in earnings is mainly due to expanding shale production driving revenues; particularly for suppliers of land drilling rigs, tubing and hydraulic fracturing services in North America.

And Halliburton Company (NYSE:HAL), a provider of technical products and services to drillers of oil and gas wells, is one of the beneficiaries of this situation; as it is expected to swing to profit in the quarter from year-earlier losses.

    "Fracking prices have gone up. Drilling rigs have gone up, so the quarter ought to be good for service companies," said Mike Breard, an analyst at Hodges Capital in Dallas.

Halliburton is expecting to report 17 cents a share quarterly profit on Monday July 24, 2017, before the opening bell, from a loss on charges of $3.73 a year earlier. Analysts expect revenue to be $4.86 billion.

Halliburton shares have pulled themselves back over their 50-day moving average in a big way for the first time since February rising more than 10% off of the lows hit earlier this month.

Recently, analysts at Barclays issued a cautious outlook on the North American energy industry, but held HAL as one of its two overweight picks. Shares were also upgraded to "Buy" by Seaport Global Securities on Thursday.

Halliburton has a 50 day moving average of $43.66 and a 200 day moving average of $49.22. The stock’s market cap is $39.38 billion. Halliburton has a 12 month low of $40.12 and a 12 month high of $58.78.

Influencing Factors to Consider

The world's second-largest oilfield services company has an incredible history when it comes to beating earnings estimates. The company posted a positive earnings surprise in each of the last four quarters, the average being 68.49%. Investors should note that Halliburton hasn't missed earnings estimates since mid-2014.

Drilling activities have increased lately due to an improvement in North American land market. This is likely to help Halliburton witness higher revenues in the domestic markets. This increased rig count bodes well for the oilfield service player Halliburton.

Halliburton, which generated 48% of its total revenue from international operations in the last quarter, is likely to benefit from the higher international rig count. 

President Trump's exit from Paris Climate accord also provided an impetus to drilling activities.

As well, the company's new CEO, Jeff Miller, is contemplating raising the company's various services rates, which are likely to boost the revenues of the company. Halliburton expects the prices to increase by at least 10% and in some cases 20% or more this year.

During the quarter, the company acquired the Tulsa-based Summit ESP; this will provide a gain as devices manufactured by Summit ESP are in high demand and are being utilized by upstream energy players for extending the life of shale wells. The development is likely to help the company to earn significant cash flow for stockholders.

Analysts and Hedge Funds Opinions

Scotiabank restated their buy rating on shares of Halliburton Company in a research report published on Wednesday, June 28th. They currently have a $59.00 target price on the oilfield services company’s stock.

Several other analysts have also recently commented on the company…..

  • Royal Bank of Canada set a $65.00 price objective on Halliburton Company and gave the company a “buy” rating in a report on Saturday, June 24th.
  •  Jefferies Group LLC reissued a “buy” rating and set a $69.00 price objective on shares of Halliburton Company in a report on Friday, June 30th.
  • Credit Suisse Group set a $60.00 target price on Halliburton Company and gave the company a “buy” rating in a research note on Saturday, July 1st.
  • Finally, Barclays PLC restated an “overweight” rating on shares of Halliburton Company in a research note on Monday, June 26th.

Three analysts have rated the stock with a sell rating, five have assigned a hold rating, twenty-five have given a buy rating and one has issued a strong buy rating to the company’s stock. The stock currently has a consensus rating of “Buy” and a consensus target price of $60.21.

Several institutional investors have recently made changes to their positions in the stock…..

  • Independent Advisor Alliance purchased a new stake in Halliburton Company during the fourth quarter valued at approximately $101,000.
  • Israel Discount Bank of New York GFN purchased a new stake in Halliburton Company during the fourth quarter valued at approximately $100,000.
  • Sumitomo Mitsui Financial Group Inc. purchased a new stake in Halliburton Company during the first quarter valued at approximately $100,000.
  • Perigon Wealth Management LLC purchased a new stake in Halliburton Company during the fourth quarter valued at approximately $109,000.
  • Finally, Sowell Financial Services LLC purchased a new stake in Halliburton Company during the fourth quarter valued at approximately $117,000. Hedge funds and other institutional investors own 79.48% of the company’s stock

Harvey’s Options Volatility Indicator

Conclusion

Halliburton shares have suffered this year, as have shares of all oil-related companies, to reflect the commodity’s price slide and uneven outlook; but have done better than its peers.

Halliburton has an incredible history when it comes to beating earnings estimates. Investors should note that Halliburton hasn't missed earnings estimates since mid-2014. As far as recent history is concerned, the TX-based firm delivered earnings beat in each of the trailing four quarters, with an average positive earnings surprise of 68.49%; so a beat is expected.

Therefore, based on the facts above, and Harvey’s Options Volatility Indicator, the following option trade is recommended…..

** OPTION TRADE: Buy the HAL AUG 18 2017 45.000 CALL at approximately $1.60. Place a pre-determined sell at $3.20.

Note: Add a protective stop loss of $0.65.

If you wish to receive more options trading recommendations similar to this, which will help boost your portfolio strategy, get on board with the members of Stock Options Made Easy.

Our proven track record says it all!!

”Success is simple. Do what's right, the right way, at the right time.”

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Options traders are not successful because they win.

Options traders win because they are successful.

 


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”Success is simple. Do what's right, the right way, at the right time.”


Option Tip for your Success!
Options traders are not successful because they win.
Options traders win because they are successful.





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