Can Halliburton Stock Jump 2x To Reach $25 Again Anytime Soon?

by Trefis Team
Halliburton Company
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Halliburton’s stock (NYSE: HAL) has rallied well over 150% over recent weeks (vs. about 40% gain in the S&P 500) to its current level of $13 after falling to a low of below $5 in late March as a rapid increase in the number of Covid-19 cases outside China resulted in heightened fears of an imminent global economic downturn. But the stock remains at roughly half the $25 level it was at the beginning of the year, and we believe it is likely to remain subdued until the coronavirus outbreak gets contained and global energy consumption increases. Our conclusion is based on our detailed comparison of Halliburton’s stock performance during the current crisis with that during the 2008 recession in an interactive dashboard analysis.

How Did Halliburton Stock Fare During The 2008 Downturn And What Does It Mean For The Stock This Time Around?

We see HAL stock declined from levels of around $32 in October 2007 to roughly $13 in March 2009 (as the markets bottomed out) – implying that the stock lost as much as 60% of its value from its approximate pre-crisis peak. This marked a larger drop than the broader S&P, which fell by about 51%. However, HAL recovered strongly post the 2008 crisis to about $25 in early 2010 – rising by 86% between March 2009 and January 2010. In comparison, the S&P bounced back by about 48% over the same period.

In comparison, HAL stock lost 76% of its value between the market peak on February 19 to the low on March 23 and has already bounced back 140% since then. Keeping in mind the trajectory over 2009-10, this suggests a potential recovery to pre-crisis levels is plausible once economic conditions begin to show signs of improvement but, growing crude oil inventory levels across the world remain a near-term concern.

But When Can We Expect Further Recovery In Halliburton Stock?

The rally across industries over recent weeks can primarily be attributed to the Fed stimulus which put investor concerns about the near-term survival of companies to rest. The gradual lifting of lockdowns globally has also helped the demand for some non-essential goods recover. Over the coming weeks, we expect continued improvement in demand and subdued growth in the number of new COVID-19 cases in the U.S. to buoy market expectations. While second-quarter results will be weak, investors will focus their attention on 2021 results – helping Halliburton stock trend higher over the latter half of the year as crude oil demand exceeds supply.

While the near-term outlook for oil companies remains grim, which S&P 500 component stocks have the best chance of outperforming the benchmark index? Our 5 In the S&P 500 That’ll Beat The Index: TWTR, ISRG, NFLX, NOW, V look promising.

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