Helmerich & Payne (HP) could benefit from improving North American margins, a recovery in Saudi Arabia and growth in Argentina's Vaca Muerta, while performance-based contracts could support further margin gains, UBS Securities said.

The investment firm said in a Thursday note that it expects North American Solutions Margin/Day to increase to $19,660 in fiscal 2027 from $17,630 in fiscal Q2, as flat activity could tighten the market for super-spec rigs. It also expects HP's Vaca Muerta rig count to rise to 18 by 2028 from nine currently.

HP has reactivated five of 27 rigs suspended in Saudi Arabia, with UBS expecting the final two reactivations in the first half of fiscal 2027.

The company also has more than 50% of its active North American rigs under performance-based contracts, which UBS said could support margin improvement.

UBS initiated coverage with a buy rating and a $49 price target.

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