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Halliburton Stock Hits 52-Week Low: Trouble for Investors?
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Shares of oilfield service major Halliburton Company (HAL - Free Report) slipped to a 52-week low of $27.53 per share last week. Year to date, HAL has lost nearly 23% of its value compared with the sector’s decline of 0.3% and the Zacks Oil and Gas Field Services industry’s fall of 12.5%. Meanwhile, the S&P 500 Index has risen 17.8% over the same timeframe.
YTD Comparison
Image Source: Zacks Investment Research
Halliburton Falls Victim to Data Breach
Apart from its North American woes, which have been the major factor in pulling down the stock, the company has been plagued by cybersecurity breach concerns. The recent cyberattack on Halliburton on Aug. 21 raises potential long-term risks despite initial limited operational disruptions. The breach, which led to unauthorized access and data removal, could result in increased regulatory scrutiny, customer hesitancy and potential litigation. While Halliburton maintains that the attack won't materially impact financials, the long-term costs of managing cybersecurity, reputation damage, and possible customer defection could weigh on future earnings.
Bearish Underlying Fundamentals Weighing on HAL
North American Revenue Decline: Halliburton’s North American segment, which accounts for more than 40% of its total revenues, has experienced significant challenges. In Q2 of 2024, revenues from this region fell 8.0% year over year and 2.6% quarter over quarter due to softer oil and gas activity. This sluggishness in North America, driven by weaker energy prices and reduced exploration activity, puts downward pressure on Halliburton's overall performance, as the region remains a key contributor to the company’s earnings.
Weak Energy Market Conditions: Crude oil prices have plummeted to multi-year lows, with Brent and WTI prices falling to their lowest level since December 2021. These weak pricing conditions have curbed exploration and production activity. With the broader industry facing reduced demand and investment, Halliburton’s revenues could be squeezed, especially in its North American operations.
Southbound Estimate Revisions for Halliburton
Earnings estimates for HAL for 2024 have moved down 6.5% to $3.14 over the past 60 days, while the same for 2025 have dropped 9% to $3.55. The negative estimate revision depicts bearish sentiments for the stock. For this year, the company itself anticipates a 6% to 8% decline in full-year North America revenues from 2023 due to continued lower rig counts and service activity levels.
Investors should know that HAL’s operations are more heavily weighted toward North America than those of its peers SLB (SLB - Free Report) and Baker Hughes (BKR - Free Report) , leaving it more vulnerable to regional weakness than its rivals. About 40% of Halliburton's business revenues are in North America compared to some 20% for SLB and 25% for BKR.
Final Word: Get Rid of HAL
As we can see, Halliburton is under selling pressure as it faces multiple headwinds. Consequently, earnings estimates for this year and the next are on the decline, signaling a bearish outlook for the company. With negative sentiment surrounding HAL quite evident, potential investors would be wise to avoid the stock and look for better opportunities elsewhere.
Halliburton currently carries a Zacks Rank #5 (Strong Sell).
Image: Bigstock
Halliburton Stock Hits 52-Week Low: Trouble for Investors?
Shares of oilfield service major Halliburton Company (HAL - Free Report) slipped to a 52-week low of $27.53 per share last week. Year to date, HAL has lost nearly 23% of its value compared with the sector’s decline of 0.3% and the Zacks Oil and Gas Field Services industry’s fall of 12.5%. Meanwhile, the S&P 500 Index has risen 17.8% over the same timeframe.
YTD Comparison
Image Source: Zacks Investment Research
Halliburton Falls Victim to Data Breach
Apart from its North American woes, which have been the major factor in pulling down the stock, the company has been plagued by cybersecurity breach concerns. The recent cyberattack on Halliburton on Aug. 21 raises potential long-term risks despite initial limited operational disruptions. The breach, which led to unauthorized access and data removal, could result in increased regulatory scrutiny, customer hesitancy and potential litigation. While Halliburton maintains that the attack won't materially impact financials, the long-term costs of managing cybersecurity, reputation damage, and possible customer defection could weigh on future earnings.
Bearish Underlying Fundamentals Weighing on HAL
North American Revenue Decline: Halliburton’s North American segment, which accounts for more than 40% of its total revenues, has experienced significant challenges. In Q2 of 2024, revenues from this region fell 8.0% year over year and 2.6% quarter over quarter due to softer oil and gas activity. This sluggishness in North America, driven by weaker energy prices and reduced exploration activity, puts downward pressure on Halliburton's overall performance, as the region remains a key contributor to the company’s earnings.
Weak Energy Market Conditions: Crude oil prices have plummeted to multi-year lows, with Brent and WTI prices falling to their lowest level since December 2021. These weak pricing conditions have curbed exploration and production activity. With the broader industry facing reduced demand and investment, Halliburton’s revenues could be squeezed, especially in its North American operations.
Southbound Estimate Revisions for Halliburton
Earnings estimates for HAL for 2024 have moved down 6.5% to $3.14 over the past 60 days, while the same for 2025 have dropped 9% to $3.55. The negative estimate revision depicts bearish sentiments for the stock. For this year, the company itself anticipates a 6% to 8% decline in full-year North America revenues from 2023 due to continued lower rig counts and service activity levels.
Investors should know that HAL’s operations are more heavily weighted toward North America than those of its peers SLB (SLB - Free Report) and Baker Hughes (BKR - Free Report) , leaving it more vulnerable to regional weakness than its rivals. About 40% of Halliburton's business revenues are in North America compared to some 20% for SLB and 25% for BKR.
Final Word: Get Rid of HAL
As we can see, Halliburton is under selling pressure as it faces multiple headwinds. Consequently, earnings estimates for this year and the next are on the decline, signaling a bearish outlook for the company. With negative sentiment surrounding HAL quite evident, potential investors would be wise to avoid the stock and look for better opportunities elsewhere.
Halliburton currently carries a Zacks Rank #5 (Strong Sell).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.