Last week HAL experienced a decline of 6% largely as a
result of industry wide discomfort with current geopolitical risks. Industry
competitors Schlumberger and Baker Hughes share price declined 3.5% and 7%,
respectively over the same period for comparison. After Q2 earnings were
released multiple Wall Street analysts raised their price targets for HAL significantly
(>10%) above our own. HAL has experiencing increased volatility more
recently but with the Middle East / Asia segment contributing less than 20% of
annual revenues and with expectations of better numbers from Latin America
(compared to 2014 Q2) in Q3 along with continued growth in North America we
also agree that an increased price target is warranted. Our new price target for HAL has been raised to
$79, on the mid-lower end of analyst estimates, along with a new stop loss of
$63. We have already experienced strong returns YTD and expect HAL to continue
to remain a strong position in the portfolio.
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