DALLAS (AP) -- Shares of Halliburton Co. dipped Wednesday and Dahlman Rose & Co. lowered its profit forecast citing a sluggish outlook for oil and gas drilling in North America.
THE SPARK: Dahlman Rose analyst James Crandell lowered his profit predictions after a visit with Halliburton Chief Financial Officer Mark McCollum. He kept a "Buy" rating on the stock but lowered his 12-month target for the shares to $49 from $52.
THE ANALYSIS: "The primary reason for our estimate reduction in the fourth quarter is the sluggish environment in North American rig activity, which is likely to persist," Crandell wrote in a note to clients.
Crandell said that U.S. prices were likely to fall for hydraulic fracturing services used in extracting natural gas, and relief won't come until the second quarter of next year. Natural gas prices have sagged due to strong production, and that's hurting drilling activity.
The analyst added that further losses are expected from Halliburton's operations in Iraq's Majnoon field.
For the fourth quarter, Crandell reduced his earnings forecast to 72 cents per share from 78 cents per shares. For 2013, he cut it to $3.50 per share from $3.75 per share.
Analysts surveyed by FactSet expect the Houston-based company to earn 75 cents per share in the fourth quarter and $3.46 per share next year.
SHARE ACTION: Halliburton shares were down 76 cents, or 2.2 percent, to $34.01, in midday trading.