Halliburton Targets Higher Returns With Leaner Spending: Analysts

Core Viewpoint - Halliburton Company reported third-quarter results that exceeded expectations, driven by stronger execution and improved cost efficiency [1] Financial Performance - RBC Capital Markets upgraded Halliburton to Outperform from Sector Perform, raising the price forecast to $31 from $26 due to strong third-quarter results [1] - Halliburton's quarterly costs were reduced by approximately $100 million through operational optimization and headcount adjustments [4] - Projected capital spending is expected to decrease by 30% in 2026 to $1 billion, representing 4.8% of revenue, compared to an average of 6% from 2023-2025 [4] - RBC projects Halliburton's 2026 free cash flow at $1.8 billion, a 4% year-over-year increase, implying a 9% yield [6] - Revenue projections for 2025 and 2026 have been increased to $21.94 billion (up 2%) and $21.67 billion (up 4%), respectively [7] - EBITDA forecasts for 2025 and 2026 were raised by 5% to $4.27 billion and $4.09 billion, respectively [7] - Expected earnings are projected to rise from $1.41 in 2025 to $2.14 in 2026 [7] Valuation - Halliburton trades at 6.1x and 6.4x EV/EBITDA on 2025 and 2026 estimates, respectively, which is below its eight-year average multiple of 7.3x [8] - The new price forecast of $31 reflects a 7.5x multiple on 2026 estimated EBITDA, up from 7.0x previously, indicating improved margins and stronger growth prospects [9] Growth Catalysts - Halliburton's partnership with VoltaGrid is highlighted as a new growth catalyst, focusing on distributed power solutions for data centers in the Middle East [5] - The firm expects shareholder returns of 91% in 2025 and 75% in 2026, remaining in line with peers despite reduced buybacks [6]