Strong U.S. Rig Demand Will Drive High Near-Term Growth for Helmerich & Payne; Raising FVE to $31

Helmerich & Payne, or H&P, posted impressive results for the second quarter of its fiscal year 2022 (first quarter of the calendar year 2022), primarily due to continually improving North American drilling activity. Top line growth came in at 58% year over year, and it maintained sequential revenue growth in the mid-teens for the second straight quarter (a growth trajectory not seen since 2010). By our estimate, the North American rig count will continue expanding through the end of 2022, which will maintain the very high demand for H&P's services in the near to medium term. The drilling rig supply-demand gap remains tight, conveying pricing power to H&P and its peers, which will further expand top line growth. We're raising our fair value estimate to $31 from $29 as a result. Our no-moat and stable trend ratings are unchanged.