The latest analyst coverage could presage a bad day for Halliburton Company (NYSE:HAL), with the analysts making across-the-board cuts to their statutory estimates that might leave shareholders a little shell-shocked. Revenue and earnings per share (EPS) forecasts were both revised downwards, with the analysts seeing grey clouds on the horizon.
Following the latest downgrade, the 23 analysts covering Halliburton provided consensus estimates of US$15b revenue in 2020, which would reflect a concerning 30% decline on its sales over the past 12 months. The loss per share is anticipated to greatly reduce in the near future, narrowing 69% to US$0.81. Before this latest update, the analysts had been forecasting revenues of US$16b and earnings per share (EPS) of US$0.20 in 2020. the analysts have made an abrupt about-face on Halliburton, administering a slight decrease in to revenue forecasts and slashing earnings forecasts from profit to loss.
The consensus price target fell 11% to US$10.32, with the analysts clearly concerned about the company following the weaker revenue and earnings outlook. That’s not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. There are some variant perceptions on Halliburton, with the most bullish analyst valuing it at US$29.00 and the most bearish at US$5.00 per share. As you can see the range of estimates is wide, with the lowest valuation coming in at less than half the most bullish estimate, suggesting there are some strongly diverging views on how think this business will perform. As a result it might not be possible to derive much meaning from the consensus price target, which is after all just an average of this wide range of estimates.
Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. Compare this against analyst estimates for companies in the wider industry, which suggest that revenues (in aggregate) are expected to decline 3.0% next year. So it’s pretty clear that Halliburton sales are expected to decline at a faster rate than the wider industry.
The Bottom Line
The biggest low-light for us was that the forecasts for Halliburton dropped from profits to a loss this year. Unfortunately they also downgraded their revenue estimates, and our aggregation of analyst estimates suggests that Halliburton revenue is expected to perform worse than the wider market. Given the scope of the downgrades, it would not be a surprise to see the market become more wary of the business.
As you can see, the analysts clearly aren’t bullish, and there might be good reason for that. We’ve identified some potential issues with Halliburton’s financials, such as the risk of cutting its dividend. Learn more, and discover the 1 other concern we’ve identified, for free on our platform here.
Of course, seeing company management invest large sums of money in a stock can be just as useful as knowing whether analysts are downgrading their estimates. So you may also wish to search this free list of stocks that insiders are buying.
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