On Wednesday, Goldman Sachs adjusted its outlook for Baker Hughes (NASDAQ:BKR), raising the price target to $52 from the previous $51 while reiterating a Buy rating on the company’s shares. The adjustment comes as the firm prepares for Baker Hughes’ fourth-quarter earnings, due January 30, acknowledging a potential softening in industry activity but still recognizing the strength in the company’s diverse portfolio and unique growth drivers. The company, currently valued at $46.55 billion, has demonstrated robust revenue growth of 11.08% over the last twelve months.
Goldman Sachs’ analysis suggests that Baker Hughes’ Oilfield Services & Equipment (OFSE) segment, with its production-oriented focus, is well-positioned to outperform in a moderating macroeconomic environment. The firm also sees potential in the Industrial & Energy Technology (IET) business, citing the company’s broad portfolio as a foundation for long-term growth. This segment is expected to benefit from new energy orders and services related to Liquefied Natural Gas (OTC:LNGLF) (LNG) aftermarkets.
The investment firm remains confident in Baker Hughes’ ability to meet its 20% margin targets, which are viewed as milestones rather than final objectives. Goldman Sachs points out that the management’s commentary suggests there might be further upside to these targets. The refreshed sum-of-the-parts (SOTP) analysis by the firm indicates an 8-19% potential upside for Baker Hughes.
The raised price target reflects a 13% total return, as per Goldman Sachs’ latest note. The firm’s positive stance on Baker Hughes is underpinned by the company’s diversified offerings and specific catalysts that are expected to continue driving share performance.
In other recent news, Baker Hughes, a global energy technology firm, reported a record quarterly EBITDA in its third quarter 2024 earnings call, marking a 20% year-on-year EBITDA growth for the third consecutive quarter. Despite a slight revenue miss of just over $200 million due to project delays, Baker Hughes expects recovery in Q4 and Q1. In addition, the company announced significant expansion of its operations in Namibia with the inauguration of a new liquid mud plant at Walvis Bay Port, currently the largest of its kind in the country.
Furthermore, Baker Hughes secured significant contracts with Brazilian state-run oil company Petrobras to supply flexible pipe systems for Brazil’s pre-salt oilfields. RBC Capital Markets recently updated its outlook on Baker Hughes, raising the price target to $49.00 from the previous $43.00 and maintaining its Outperform rating. This change is attributed to the company’s clearer path to long-term growth, especially in the Gas Technology sector. These are the recent developments that investors should consider.
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