We initiate coverage on Halliburton with a Hold rating and a $35.00 price target. At 12.0 times 2027 estimated earnings, the shares fairly balance robust international drilling demand against ongoing North American completion friction and working capital absorption.
Key points
- $33.67 share price fairly balances international expansion against domestic completion drag at 12.0 times 2027 estimated earnings.
- 14.2% operating margin is our 2027 forecast, discounting management's ambitious 15% target due to persistent North American pricing friction.
- $1.6 billion annual free cash flow supports ongoing share repurchases, keeping leverage manageable despite recent working capital absorption.
The call
At $33.67, the market expects Halliburton to convert international contract wins into earnings expansion while North American margins bottom. This price reflects 12.0 times our 2027 earnings per share estimate of $2.81, requiring modest revenue growth and gradual margin recovery without counting on a domestic shale resurgence. The market's valuation is about right.
Operating margin history and outlook (%)- Reported operating margin
- Desk forecast margin
SEC filings and desk model as of October 20, 2026. GAAP through Q2 2026; Q3 2026 adjusted.
We project 2027 revenue of $23.3 billion and operating profit of $3.31 billion, reflecting a 14.2% margin. While international projects in Saudi Arabia and Latin America provide durable baseline growth, domestic pressure pumping white space and crew transfer frictions cap near-term upside. With balanced risk-reward, shares will track the broader market.
12-month share value across 2027 forward P/E multiples ($)Desk estimates as of October 20, 2026. EPS based on 820M diluted shares.
Valuation
| Valuation metric | Desk estimate |
|---|
| 2027 estimated revenue | $23.3 billion |
| 2027 estimated operating margin | 14.2% |
| 2027 estimated operating income | $3.31 billion |
| 2027 estimated diluted EPS | $2.81 |
| Target forward P/E multiple | 12.5 times |
| 12-month price target | $35.00 |
A 12.5 times multiple aligns with Halliburton's mid-cycle historical range during mixed commodity regimes. This multiple appropriately values steady international offshore and deepwater expansion against volatile domestic hydraulic fracturing returns. Because the implied 4.0% return sits within our neutral band, we initiate coverage with a Hold rating.
Risks
- North American pressure pumping utilization deteriorates further, visible in weekly frac spread counts dropping below 190.
- International contract mobilization costs in the Middle East and Latin America run over budget, visible in Drilling and Evaluation margin contraction.
- Working capital fails to unwind in the fourth quarter, visible in cash collections lagging quarterly net income.
What would change my mind
A confirmed inflection in North American pressure pumping pricing alongside prompt working capital conversion would turn us constructive.
