Halliburton is Monday's IBD Stock Of The Day, as the oilfield service firm comes off a week of strong gains. The stock, below a buy point in a pattern waving some red flags, edged higher Monday.
Houston-based Halliburton is one of the world's largest providers of products and services to the energy industry. The company does business in more than 7o countries in the Middle East and throughout the Americas, Europe and Africa. Halliburton's services include identifying and managing drilling conditions, constructing wells and providing other services related to energy development and production.
U.S. crude oil prices angled up 1.8% Monday, around $75.60 per barrel after the U.S. announced it was switching its stance to purchases, away from sales, of oil for the Strategic Petroleum Reserve. Last week, the International Energy Agency revised higher its outlook for oil demand growth in 2023, based on more robust-than-expected buying in China, India and the Middle East.
Also last week, the Energy Information Administration (EIA) reported the number of U.S. drilled-but-uncompleted (DUC) oil and natural gas wells climbed by 22, on a month-over-month basis, to 4,443 in November. It was the second consecutive monthly increase in the DUC well count after 27 months of declines.
Last week, there were 776 active oil rigs in the U.S., according to Baker Hughes, which releases weekly oil rig counts. This was a decline of four rigs compared to the prior week but a 34% increase compared to the same time last year.
The combination of data points could mean a number of things. But the sharp increase in completions points to rising demand for oilfield services, while the modest slowdown in drilling activity shows demand relatively stable, and well above year-ago levels.
Analysts project quarterly revenue increases in Q4 for both Halliburton's completed wells segment and its drilling and evaluation business.
Halliburton topped third-quarter earnings and revenue views in late October. HAL EPS jumped 114% to 60 cents while sales grew 42% to $5.3 billion.
Halliburton Stock
Halliburton stock advanced 0.6% to 36.06 during Monday's market trading, with volume down more than 50%. The stock is working on a deep cup-with-handle base and is around 10% from a 40.09 buy point, according to MarketSmith analysis.
The overall base is around 47% deep, beyond the 35% to 40% maximum for typical bases. Deep bases aren't deal killers, but they raise a red flag, signaling that a breakout from that base has increased risk.
The same is true for the handle on Halliburton's chart, which is 17% deep. Handles can range to 12% deep before raising a similar red flag.
HAL shares found support at the 50- and 200-day moving averages and have been trading above both those key averages since Dec. 13. With the market's status shifted to "Uptrend Under Pressure," investors should exercise caution when considering new buys or debating potentially adding exposure.
Fellow oilfield service firm Baker Hughes dropped 0.4% while Schlumberger edged up 0.9% Monday.
Last week, oil stocks, including IBD's oilfield service group, made gains, even as the market posted broad losses. The group collectively rose 4.5%. Halliburton stock gained nearly 9% on the week.
The company is expected to announce fourth-quarter results in late January. Analysts are projecting earnings advancing 86% to 67 cents per share in Q4. Wall Street forecasts revenue increasing 30% to $5.6 billion.
IBD ranks Halliburton stock second in the Oil & Gas-Field Services group. HAL shares have a Composite Rating of 99 out of 99. Its Relative Strength Rating is 95; the RS Rating is an exclusive IBD Stock Checkup gauge for share price movement, with a 1-to-99 score. The EPS Rating is 80.
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