Halliburton Co HAL:NYSE

Halliburton (HAL) received an investment rating upgrade Tuesday to overweight from equalweight from Morgan Stanley, which said it expects the energy services company's free cash flow will not only surprise investors but also be headed to them.

The firm said it raised its price target on the stock to $30 per share from $28, above the stock's Monday closing price of $23.99. Shares were trading nearly 3% higher in Tuesday's premarket.

Halliburton may have suffered from an "identity problem" in 2021, Morgan Stanley analysts Connor Lynagh, Daniel Kutz, and Thomas Claes Johnson said in a Tuesday note to clients. They described Halliburton as a North American "completions powerhouse" but said many investors "now prefer heavier" international portfolios.

Still, the analysts said, "We think the Street is underestimating HAL's commitment to capital restraint, and commensurately its [free cash flow]." They added: "Pairing this with [an] increased degree of market conviction that this will be returned, not reinvested, we think this could drive multiple expansion."

Halliburton has an average investment rating of outperform among analysts polled by Capital IQ, with price targets ranging from $17 to $38.

(MT Newswires covers equity, commodity and economic research from major banks and research firms in North America, Asia and Europe. Research providers may contact us here: https://www.mtnewswires.com/contact-us)

Price: 24.7, Change: +0.71, Percent Change: +2.96