Raising Helmerich & Payne’s FVE to $49; Strong Pricing Environment Yields Continued Margin Expansion

Helmerich & Payne, or H&P, commenced its fiscal-year 2023 on strong footing, posting first-quarter revenue growth of 76% year over year and 14% sequentially. H&P’s quarterly operating margin expanded to 19%, the firm’s highest level since mid-2015, mostly driven by steadily improving day rates in North America, a trend that will likely persist over the next several quarters. We’re raising our fair value estimate to $49 from $42 following results, primarily due to our improved outlook for firmwide margin accretion. We now estimate firmwide operating margins will average 20% moving forward, compared with our prior forecast of 15%. We maintain our no-moat rating and stable moat trend.