Halliburton's (HAL) Q1 results slightly beat expectations, driven by international performance, especially in Latin America, while disruptions in the Middle East weighed on earnings, Morgan Stanley said in a note Wednesday.

The firm said revenue and earnings before interest, taxes, depreciation, and amortization came in just above market projections. The beat was mainly driven by strong international results outside the Middle East, with Latin America revenues coming in 7% above consensus and 13% above Morgan Stanley's estimates, while North America revenues were slightly higher as well, beating consensus by 2% and the bank's estimates by 4%.

Management said disruptions in the Middle East reduced earnings by about $0.02 to $0.03 per share in Q1 and expects a larger impact of $0.07 to $0.09 per share in Q2, while North America is showing "clear signs" of recovery, the firm added.

"The Middle East remains the key swing factor as near-term disruptions weigh on results, though this supports a more constructive multi-year service demand backdrop, with Venezuela another potential longer-term growth driver that Halliburton flagged," the bank said.

Morgan Stanley raised Halliburton price target to $42 from $40 while keeping its overweight rating. Shares of the company rose past 3% in the session.

Price: 39.25, Change: +1.10, Percent Change: +2.87