Analysts hit hard on Halliburton (NYSE:HAL) Stock

Halliburton (NYSE:HAL), which is a Texas- based company and a provider of oil and gas service, declared a merger with Baker Hughes Incorporated (NYSE:BHI) earlier. However, there were some issues regarding the merger which included a disagreement on the purchase price. Baker Hughes (NYSE:BHI) did not agree with the price which Halliburton (NYSE:HAL) offered and the company also had to face criticism on trying to takeover Baker Hughes (NYSE:BHI) in an antagonistic manner.

Later on the two companies did manage to find a common ground and agreed on a deal which was worth $34.6 billion. The price of crude oil had been declining since June 2014 and overall a 50% decrease was seen it’s pricing. By the end of Friday’s trading the price of West Texas Intermediate was $48.36 per barrel while the price of Brent Crude was $50.11 per barrel.

The decrease in the oil prices was a source of problem for many companies and Halliburton (NYSE:HAL) was no exception to it. However, according to Barclay’s the merger of Halliburton (NYSE:HAL) and Baker Hughes (NYSE:BHI) will not only help Halliburton (NYSE:HAL) survive the low oil prices but will also make its position stronger in North America.

The analysts are optimistic about the future of Halliburton (NYSE:HAL) because the company had been able to survive previous hurdles as well. The company had seen a 46% fall in margin in 2013 and in 2009 a 60% fall in margin was also faced but both times it managed to survive and regain the market shares. Schlumberger Limited is the first in line of oil and gas service providers while Halliburton (NYSE:HAL) is the second largest service provider followed by Baker Hughes (NYSE:BHI).

Barclays gave Halliburton’s stock (NYSE:HAL) an overweight rating and gave the company a price target of $48. Halliburton (NYSE:HAL) was able to dominate the market in North America due to its cost structure and operational productivity for service-intensive activity. In 2015’s second half, the merger of the two companies will be completed along with the approval from the shareholders, regulatory authorities and other traditional closing conditions.

This will enable the company to come face to face with Schlumberger and compete. Halliburton (NYSE:HAL) had declared at 2013’s analysts day that its merger with Baker Hughes (NYSE:BHI) will help the company to achieve its goal of tripling its field revenue to $9 billion. The merger will also benefit Baker Hughes (NYSE:BHI) as the company is fairly new to the US pressure pumping business.

The analysts at Barclays believe that companies should be able to take up superior logistics as well as efficiency standards in order to be able to compete in the oil services categories. Barclays also believe that Baker Hughes (NYSE:BHI) lack these qualities and hence the merger will help the company in terms of those categories.