Halliburton faces revenue growth risks amid analyst downgrade

Earlier this month, Halliburton Company reported a cyberattack that disrupted its critical business applications, raising concerns about its operational stability. RBC Capital Markets analyst Keith Mackey downgraded Halliburton's stock rating from Outperform to Sector Perform, citing a significant risk of lower revenue growth. The analyst also reduced the price target from $44 to $37, reflecting a more cautious outlook on the company's future performance. Mackey highlighted that Halliburton's revenue growth, which had previously outpaced its large-cap oilfield services peers from 2021 to 2023, is expected to lag by approximately 5% from 2024 to 2026. This anticipated decline is largely attributed to Halliburton's heavy reliance on the North American market, which accounts for 42% of its revenue, compared to just 23% for competitors like Schlumberger and Baker Hughes. The analyst pointed out that global rig counts are increasing at a decreasing rate, which poses challenges for companies with less geographic and business diversity. In contrast, firms with broader operational scopes are better positioned to capitalize on market opportunities and outperform their peers. Despite Halliburton's achievements in margin expansion and reduced capital intensity, the potential for increased spending in exploration and production is expected to favor dedicated U.S. providers. As a result, Halliburton's stock performance may be hindered in the near term, reflecting the broader challenges facing the company in a tepid commodity macro environment.