Griffin Securities upgrades Halliburton stock rating on strong results By Investing.com

Halliburton posted Q1 2026 EPS of $0.55, ahead of Griffin Securities’ $0.51 estimate and consensus by $0.01, while revenue of $5.4 billion came in 140 bps above the firm’s forecast. Griffin Securities upgraded the stock to Buy from Neutral and lifted its price target to $47 from $35, citing stronger-than-expected results and a more bullish second-half 2026/2027 outlook. Offsetting some strength, EBIT fell 14% year over year, the Middle East declined 13% due to war-related disruptions, and North America revenue slipped 4%.

Analysis

HAL is being re-rated on the idea that the worst of the geopolitical drag is transitory, but the bigger second-order signal is that the earnings mix is improving exactly where pricing power is highest: international activity and complex-well exposure. That matters because the market is still valuing the name like a cyclical beta proxy, while the business is increasingly a leveraged call on non-U.S. capex normalization and service pricing discipline, which tends to lag the first move in oil by a quarter or two.

The near-term setup is asymmetric in two directions. If crude stays soft after the ceasefire headline, HAL can still work because North America was merely stable enough to avoid a guide-down, and the upside is coming from 2H mix/efficiency rather than spot oil. But if the ceasefire holds and drilling activity in the Middle East normalizes faster than expected, the stock can rerate again as investors start capitalizing 2027 earnings instead of looking through a one-quarter regional disruption.

Consensus is probably underestimating how much of the beat was operational rather than purely tax-driven. The market may have treated the tax benefit as one-off, but the real tell is that EBIT held up while revenue was only modestly down, implying the company is extracting more margin per job despite a still-mixed commodity backdrop. That usually precedes multiple expansion in oilfield services, because the sector’s upside is driven more by utilization and pricing inflection than by headline oil levels.

The main risk is that the stock’s recent run has pulled forward too much of the 2H recovery, leaving limited room for error if E&P budgets flatten or the Middle East normalizes without a matching U.S. activity rebound. Over the next 1-2 quarters, the trade is less about crude direction and more about whether service pricing and international sequencing continue to surprise positively. If they do not, HAL can easily revert to a high-quality but range-bound compounder near current valuations.

Key Decisions for Investors

• Stay long HAL but add on pullbacks rather than chasing strength; best risk/reward is a 1-3 month hold with a target toward the raised sell-side range, while cutting if North America activity rolls over or guidance fails to confirm 2H acceleration.
• Pair trade: long HAL / short XOP or a weaker U.S.-focused OFS peer basket for 1-2 quarters, betting on better international mix and margin resilience versus more commodity-sensitive names; stop if U.S. rig/activity data re-accelerate broadly.
• Buy HAL call spreads for the next earnings cycle to express upside from continued margin expansion with defined risk; best if initiated after any post-earnings consolidation, since implied volatility is likely still elevated.
• For more defensive energy exposure, rotate part of the position from upstream beta into HAL versus E&Ps, because the stock’s earnings path is increasingly tied to services pricing rather than daily oil moves.
• If HAL trades materially above the revised target range before evidence of 2H contract wins, trim 25-33% of the position; the current setup supports upside, but momentum has already priced in a meaningful portion of the recovery.