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On Thursday, RBC Capital Markets adjusted its price target on Baker Hughes (NASDAQ:BKR) stock, lowering it to $46.00 from the previous $50.00, while retaining an Outperform rating. The revision follows the company’s first-quarter earnings for 2025, where Baker Hughes’ EBITDA of $4.62 billion slightly exceeded analyst expectations by 2%. The company, currently trading at $35.60 with a market capitalization of $35.54 billion, has seen its stock decline by 7.76% over the past week. Despite surpassing estimates, the company’s full-year outlook is affected by the current uncertainties surrounding tariffs and commodity prices.InvestingPro analysis reveals that Baker Hughes maintains a perfect Piotroski Score of 9, indicating strong financial health and operational efficiency.
Keith Mackey of RBC Capital Markets noted that although the current conditions are challenging, the recent devaluation of Baker Hughes’ stock from its 2024 highs might present a good opportunity for investors willing to exercise patience. He further elaborated that the estimates for EBITDA in 2025 and 2026 have been reduced by 5% and 6%, respectively. The stock currently trades at an attractive P/E ratio of 12.8x and offers a dividend yield of 2.56%. The Outperform rating has been maintained based on the belief that the stock is now positioned as an attractive investment.
The $46 price target set by RBC Capital is derived from a consistent 10.0x multiple applied to the firm’s 2026 EBITDA estimate. This valuation is further supported by a Sum of the Parts (SOTP) analysis. According to Mackey, the applied multiple reflects respective valuations of 8.5x for Baker Hughes’ Oilfield Services & Equipment (OFSE) segment and 12.0x for its Industrial & Energy Technology (IET) business.
Baker Hughes has been navigating a complex macroeconomic landscape, with fluctuating commodity prices and tariff-related concerns influencing the industry’s dynamics. Despite these headwinds, RBC Capital’s analysis suggests that the company’s current stock valuation could be compelling for investors with a long-term perspective.
The firm’s stance on Baker Hughes remains positive, as evidenced by the continuation of the Outperform rating. Investors and market watchers will likely keep a close eye on the company’s performance and its ability to adapt to the evolving economic environment.
In other recent news, Baker Hughes reported its first-quarter 2025 earnings, revealing an adjusted earnings per share (EPS) of $0.51, which surpassed analysts’ expectations of $0.48. Despite this earnings beat, the company’s revenue fell short, coming in at $6.43 billion compared to the anticipated $6.53 billion. The company demonstrated a 19% year-over-year increase in adjusted EPS, although revenue shortfalls and market concerns about declining upstream spending impacted investor sentiment. Baker Hughes continues to focus on margin improvement and market expansion, particularly in its Industrial and Energy Technology (IET) sector, which showed strong performance with significant orders. The company has set a forecast for Q2 2025, projecting total revenue between $6.3 billion and $7.0 billion and total EBITDA between $1.04 billion and $1.2 billion. Analysts from S&P recently upgraded Baker Hughes’ long-term credit rating to A, reflecting confidence in the company’s financial stability. The firm remains committed to achieving a 20% margin target in its Oilfield Services and Equipment (OFSE) segment, despite challenges such as tariff impacts estimated at $100 million to $200 million for the year.
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