Overview
Piper Sandler on Tuesday raised its ratings on Halliburton and Patterson-UTI Energy from Neutral to Overweight, saying that an improving U.S. land market and a firmer long-term energy security outlook make the two stocks attractive ahead of second-quarter earnings. The brokerage emphasized that these factors outweigh near-term geopolitical uncertainty in the Middle East and volatile crude prices.
Geopolitics, oil prices and sector sentiment
In its note, Piper Sandler described the oilfield services sector as operating in a "feeling of limbo." The firm pointed to a recent episode in which crude prices rose above $110 a barrel during the U.S.-Israel-Iran conflict before retreating to near $70 after a June ceasefire. Renewed tensions around the Strait of Hormuz have since nudged prices back toward $75, which the brokerage said is keeping investors cautious for the balance of 2026 while supporting a more constructive outlook for 2027 and 2028.
The firm highlighted that these price swings and geopolitical developments are reshaping expectations ahead of second-quarter reporting, but that select service providers stand to benefit from improving operational fundamentals in the U.S. land market.
Drivers behind the upgrades
Piper Sandler cited several operational trends that it expects will support earnings revisions: improving U.S. drilling activity, rising frac utilization and firmer pricing. The brokerage singled out Halliburton, Patterson-UTI, Liberty Energy and ProPetro as the companies most likely to deliver quarters characterized as "beat-and-raise."
Specifically for Halliburton, Piper Sandler pointed to the companys stake in VoltaGrid and recent international contract wins as supplementary long-term growth drivers. The note also captured near-term market response, showing Patterson-UTI shares up 3.09% and Halliburton shares up 2.38% in intraday trading around the release.
Where the firm is more cautious
The brokerage said it has moved to a more cautious stance on Weatherford International and Flowco. For Weatherford, Piper Sandler flagged risks to 2026 estimates stemming from ongoing Middle East disruptions. For Flowco, the firm pointed to higher operating costs as a factor increasing risk to near-term estimates.
Despite those cautions, Piper Sandler maintained a positive long-term view on the offshore services segment. The firm expects an upcoming wave of rig upgrades and stronger liquefied natural gas investment to support offshore services over the next several years.
Implications ahead of earnings
With second-quarter earnings approaching, Piper Sandlers upgrades reflect a view that improving U.S. land fundamentals and firmer pricing will translate into upward earnings revisions for the names it highlighted. At the same time, the firm reiterated that short-term investor sentiment remains vulnerable to geopolitical developments and oil price volatility.