The past one year has been very difficult for the providers of oil services. Their services demand has tumbled expressively following over 50% decline in prices of crude oil in the 2nd half of last year.
The United States crude oil benchmark, WTI was up 4.54% to $60 per barrel on Saturday, although Brent oil was up 4.76% to $65.56 per barrel. In the scenario of decreasing oil prices, oil companies are unceasingly seeking to decrease their average costs in an attempt to persist the downturn.
In 2014, the second biggest oil company of the world, Haliburton Co. reached Baker Hughes for a merger. Likewise, Royal Dutch Shell lately settled its merger with BG Group Plc.
On Friday, JP Morgan revealed its future perspective for the oil industry. The research firm emphasized that while the companies were surrounded by the problems with in the industry, there are still some positive for the service companies with large market capitalization. JP Morgan indicated that large cap firms are well expanded and have the scale, flexibility and technology to survive the slump.
JP Morgan has rated the Haliburton stock as Overweight. The twelve month stock price target as assigned by the research firm stands at $56.
JP Morgan praises the Haliburton merger with Baker Hughes. During the period of declining oil prices, this will allow the company to broaden its operations and witness economies of scale. As per research firm, Baker Hughes will fill in certain Haliburton product gaps, whereas providing upgrades in remaining.
Because of the huge size of joint entity, Haliburton will be requires to do asset divestment in an attempt to get approval by regulatory body. These divestment plan, as per JP Morgan will attract small firms seeking to move up their tech curves. JP Morgan also suggests market share reshuffling in the oil service sector. If the estimates of crude oil of the company are precise, then there are chances that large equipment abrasion can occur in the industry. The equity firm expects a lot better demand and supply environment by the end of year 2017.
Around 37 analysts covered the stock of Haliburton, out of which 26 rated Buy, 9 gave Hold, and two of them assigned Sell rating g to the stock. The 12 month stock price target forecasted by the analysts is $53.72 which shows 18.3% of return potential. Clarkson RS Platou Securities analyst Turner Holm has the most bullish point of view on the stock with $70 of price target and Buy rating. Whereas Griffin Securities analyst Kevin Simpson with $40 price target and Sell rating has the most bearish view on the stock.
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