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Dial Back Expectations for Halliburton

Stocks in this article: SLB HAL GS

NEW YORK ( TheStreet) -- As long as Schlumberger (SLB) is still around, I don't believe Halliburton (HAL) will ever get the respect it truly deserves. Given that the stock is trading at its 52-week high and has posted gains of close to 50% year-to-date, I do realize it's a bit odd to complain about the Street's lack of admiration for the company.

Expectations for this company have always been too high. And while management has done an excellent job navigating the cut-throat oil services industry, the company has been unable to manufacture growth out of thin air. Weak North American demand (roughly 50% of Halliburton's revenue) has been tough to overcome, leading to a meager 1% year-over-year revenue growth in the July quarter.

Today, with shares of Halliburton trading over $50 ( exceeding my price target), I believe the stock has reached its fair value territory. I say this even with the belief that prior concerns about sluggish rig counts and slumping prices are issues of the past.

Given that the Street has recently jumped on the "Halliburton growth in 2014" campaign, it seems I'm not the only one who sees a brighter future. Brad Handler of Jefferies has cited improved upstream spending in the U.S., which he expects to grow in 2014. Along with his recent $58 price target, Handler also raised his earnings estimates for 2014 by 6%.

Not to be outdone, Raymond James recently upgraded the stock to $63, an astounding 23% premium from current levels. While citing the production potential of the Bakken formation, Goldman Sachs (GS) suggested that Halliburton will "likely exceed Street expectations."

The Bakken formation is described as a low-permeability formation contains the largest oil accumulation in the contiguous U.S. This means Halliburton should benefit from more drilling and increased demand for its equipment and services. The company is now in one of the best positions it has ever been in.

Still, let's not discount that rig productivity is still under pressure in North America and completion and production revenues declined more than 3% in the July quarter. Before jumping into 2014 projections, we should evaluate the company's performance on a quarter-by-quarter basis.

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