Hunting surged 8.1 percent today to 925.5 pence after HSBC Holdings Plc revised its share-price target to 1,015 pence from 960 pence. The stock move takes the two-day advance to more than 15 percent, the biggest leap since December 2008.
HSBC also raised earnings estimates for Hunting, citing “strong demand and improving operational performance in North America” in servicing shale exploration, as well as growing business in the Asia-Pacific region. “We see a step-change in margins and returns in 2012/13,” led by well construction, HSBC analyst Phillip Lindsay said in a note to investors.
Hunting is benefiting from an “emphatic rush” to develop so-called unconventional resources, Chairman Richard Hunting said in a statement yesterday. The boom in extraction from shale, hard rock that can be fractured to release oil and gas, saw the U.S. become the biggest gas producer in 2009. Companies including Royal Dutch Shell Plc (RDSA) are spending billions of dollars on shale in the country, where Hunting gets most of its revenue.
Analysts shrugged off concern of falling gas-rig use in the U.S., where the number of rigs in operation declined in 2011 from 2010 and will probably drop again this year, HSBC said, citing Baker Hughes Inc. data.
“Investor concern over U.S. rig-count declines are being overplayed,” Lindsay said.
Net income rose to 79.1 million pounds ($124.8 million) in 2011 from 21.8 million pounds a year earlier, Hunting said in yesterday’s statement. Goldman Sachs Group Inc. reiterated its “conviction buy” recommendation, saying the London-based company will gain from growth in demand for specialist drilling.
Exxon Mobil Corp. (XOM), the world’s largest energy company by market value and a Hunting customer, said yesterday it plans to spend $37 billion a year through 2016 to find and produce oil, natural gas and chemicals.