Houston, Texas-based Baker Hughes Company (BKR) provides oilfield products, services, and digital solutions. Valued at $34.17 billion by market cap, BKR is one of the world's largest oilfield service providers offering drilling, well intervention, decommissioning, surface pressure control, onshore composite pipe, reservoir technical, and integrated well services.
Shares of this leading energy technology company have underperformed the broader market considerably over the past year. BKR has declined 3% over this time frame, while the broader S&P 500 Index ($SPX) has rallied nearly 16.4%. In 2024, shares of BKR stock are up 1.2%, while the SPX is up 9.8% on a YTD basis.
Narrowing the focus, BKR’s underperformance looks less pronounced compared to the S&P 500 Energy Sector SPDR (XLE). The exchange-traded fund has gained marginally over the past year. The ETF’s 5.3% returns on a YTD basis outshine the stock’s marginal gains over the same time frame.
On Jul. 26, BKR shares closed up more than 5% after reporting better-than-expected Q2 results. Its adjusted EPS of $0.57 exceeded Wall Street expectations of $0.49. The company’s revenue was $7.14 billion, surpassing Wall Street forecasts of $6.81 billion. Its orders of $7.50 billion included $3.50 billion of IET orders, and its RPO of $33.50 billion included a record IET RPO of $30.20 billion. Its adjusted EBITDA of $1.13 billion, up 24.6% year over year. The company’s cash flows from operating activities were $348 million, and free cash flow stood at $106 million.
For the current fiscal year, ending in December, analysts expect BKR to report an EPS growth of 37.5% to $2.20 on a diluted basis. The company’s earnings surprise history is impressive. It beat the consensus estimate in each of the last four quarters.
Among the 21 analysts covering BKR stock, the consensus rating is a “Strong Buy.” That’s based on 17 “Strong Buy” ratings, one “Moderate Buy,” and three “Holds.”
This configuration has been consistent over the past month.
Recently, RBC Capital maintained an “Outperform” rating on BKR stock and raised the price target from $39 to $43, implying a potential upside of 25.6% from current levels.
The mean price target of $43.25 represents a 26.3% premium to BKR’s current price levels. The Street-high price target of $50 suggests an ambitious upside potential of 46%.
On the date of publication, Neha Panjwani did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
