Oilfield service giants SLB and Halliburton, both S&P 500 components, report second-quarter earnings and revenue Friday. Analysts predict EPS increases for both companies even amid some stock price target reductions in recent days.
Analysts project a 15% rise in SLB Q2 earnings, to 83 cents per share, with revenue increasing 12% to $9.08 billion, according to FactSet. Meanwhile, projections put Halliburton Q2 EPS at 80 cents, up 4% compared to a year ago, and sales totaling $5.95 billion, a 2% increase vs. Q2 2023.
The reports from Halliburton and SLB come as U.S. oil prices trade near $83 per barrel, up around 2% in July and more than 10% higher in 2024. U.S. oil prices are forecast to hover around $80 per barrel for the rest of 2024, according to FactSet analysis.
Both S&P 500 companies have recently seen quarterly revenue increases in the Middle East, offsetting stagnating or declining sales in North America.
Offshore Drilling Sector Consolidation Is Underway; Will Oil Prices Support Demand?
SLB is planning to return $7 billion to shareholders over the next two years. The company will increase its 2024 shareholder return target to $3 billion with a target for $4 billion in 2025. In April, the company announced plans to acquire chemistry solutions and drilling technology provider ChampionX, an S&P Midcap 400 component.
Halliburton stock advanced 0.2% to 36.44 while SLB stock edged down 0.4% to 48.70 during market action on Thursday. SLB has gained more than 5% on the week and HAL has rallied 7%.
S&P 500: Stock Price Target Cuts
Halliburton stock has consolidated below highs set in June 2022. Effectively flat in 2024 it has bounced more than 11% off mid-June lows. Shares of SLB notched highs in September last year. They are down 6% this year and, like HAL, bottomed in mid-June. SLB stock has jumped 15% since then.
Oil prices have rebounded after bottoming in early June.
Both Halliburton and SLB stocks are underperforming the broader S&P 500 index in 2024.
Firms are now cutting stock price targets for both oilfield service operations ahead of Q2 earnings.
On Tuesday, Stifel reduced its Halliburton stock price target to 46, from 47, maintaining a buy rating. Stifel analysts do not expect any surprises from Q2 earnings as tempered enthusiasm around U.S. onshore drilling activity and the potential for a slight dip in international growth projections are possible.
Meanwhile, on Monday, Bank of America lowered its SLB stock price target to 58 from 62, maintaining a buy rating. The firm also reduced its HAL stock price target to 41 from 45. Bank of America analysts sees "energy staying on a weak footing," with the North American outlook remaining hazy.
Piper Sandler on Monday also lowered its SLB price target to 66, from 71, and cut its HAL stock target to 46 from 49. The firm has overweight ratings for both stocks, with analysts writing that oilfield services sentiment is "fairly poor" heading into the Q2 reports, and it has a "hard time poking holes in this aside from some positioning that could get squeezy."
On July 11, Susquehanna also lowered its price target on SLB stock to 70 from 77.
Despite the yearly performances by the two S&P 500 components, the 29 stocks in the IBD-tracked Oil & Gas-Field Services industry group have collectively gained around 14% in 2024.
Please follow Kit Norton on X @KitNorton for more coverage.
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