Rising Global Energy Demand Will Unlock Automation And Lift Opportunities

Key Takeaways

• Accelerating adoption and deployment of advanced technologies and services is likely to structurally expand margins and recurring revenue, especially internationally.
  
• Strategic capital allocation and diversification into clean energy technologies and digital automation strengthen Halliburton's long-term earnings resilience and global industry leadership.
  
• Structural headwinds from decarbonization, pricing pressure, and market volatility threaten Halliburton's growth, margins, and long-term competitiveness despite efforts at technological differentiation.

Catalysts

Provides products and services to the energy industry worldwide.

• While analyst consensus expects Halliburton's international contract wins and technology rollouts (like ZEUS IQ and advanced automation) to boost growth, these analyses may underappreciate the potential for double-digit international revenue growth in unconventionals and artificial lift, driven by accelerating adoption across Latin America, the Middle East, and frontier basins; this could result in structural margin expansion well beyond current forecasts.
  
• Analysts broadly agree that Halliburton's digital and automation suite will incrementally improve productivity and margins, but the scope for global deployment remains greatly understated-widespread adoption of closed-loop automation, remote operations, and bundled services could materially amplify recurring revenues, yield premium pricing, and generate durable margin upside through 2026 and beyond.
  
• Halliburton's disciplined capital allocation and willingness to rapidly stack or retire unprofitable North American frac fleets should lead to industry-wide equipment rationalization and significantly higher utilization rates once demand rebounds, unlocking operating leverage and enabling an outsized recovery in North American margins and earnings when activity resumes.
  
• Expanding international artificial lift and production services-supported by greater global investment in energy security and the need to offset steep production declines-positions Halliburton to become the dominant lift provider globally, underpinned by a doubling of its installed Intelevate automation platform, which is likely to substantially boost both topline revenue and high-margin aftermarket sales.
  
• Halliburton's investments in clean energy technologies (carbon capture, geothermal) and integrated project management offer new, resilient revenue streams in less-cyclical markets, which could diversify earnings faster than anticipated and ultimately lift company-wide ROIC and long-term earnings power as the global energy mix gradually evolves.

Halliburton Future Earnings and Revenue Growth

Assumptions

• This narrative explores a more optimistic perspective on Halliburton compared to the consensus, based on a Fair Value that aligns with the bullish cohort of analysts.
• The bullish analysts are assuming Halliburton's revenue will grow by 2.5% annually over the next 3 years.
• The bullish analysts assume that profit margins will increase from 8.4% today to 11.4% in 3 years time.
• The bullish analysts expect earnings to reach $2.7 billion (and earnings per share of $3.64) by about July 2028, up from $1.9 billion today. The analysts are largely in agreement about this estimate.
• In order for the above numbers to justify the price target of the more bullish analyst cohort, the company would need to trade at a PE ratio of 12.5x on those 2028 earnings, up from 9.9x today. This future PE is greater than the current PE for the US Energy Services industry at 11.3x.
• Analysts expect the number of shares outstanding to decline by 2.93% per year for the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 7.81%, as per the Simply Wall St company report.

Halliburton Future Earnings Per Share Growth

Risks

• Global decarbonization and net-zero trends threaten long-term oil and gas demand, leading to structurally weaker revenue and lower growth prospects for Halliburton as energy investment shifts toward renewables.
  
• Halliburton faces persistent pricing headwinds and reduced demand in key markets like North America and Saudi Arabia, with management forecasting year-on-year revenue declines and margin compression in its largest divisions, which could limit earnings growth and pressure net margins.
  
• Halliburton's heavy reliance on oil and gas capital expenditure cycles exposes the company to pronounced revenue volatility, as evidenced by current customer caution, white space in activity calendars, and a lack of visibility into recovery timing in both North America and major international markets.
  
• Growing regulatory, geopolitical, and environmental pressures-including rising tariffs, litigation risks, and environmental liabilities-are increasing costs and contributing to earnings volatility, with artificial lift and other segments already facing near-term cost increases.
  
• The company's efforts to differentiate through technology and automation may not be sufficient to offset structural secular headwinds, as larger or more diversified competitors could capture a greater share of the market if Halliburton cannot successfully pivot or diversify its business, increasing the risk of long-term market share erosion and stagnating revenues.

Valuation

• The assumed bullish price target for Halliburton is $34.64, which represents two standard deviations above the consensus price target of $27.74. This valuation is based on what can be assumed as the expectations of Halliburton's future earnings growth, profit margins and other risk factors from analysts on the bullish end of the spectrum.
  
• However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $35.0, and the most bearish reporting a price target of just $21.0.
  
• In order for you to agree with the bullish analysts, you'd need to believe that by 2028, revenues will be $24.0 billion, earnings will come to $2.7 billion, and it would be trading on a PE ratio of 12.5x, assuming you use a discount rate of 7.8%.
  
• Given the current share price of $21.39, the bullish analyst price target of $34.64 is 38.2% higher.
  
• We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.