Double Analyst Upgrades Helping Baker Hughes

Energy

Published: March 12, 2019 1:45 pm

Last Updated: January 30, 2020 11:34 pm

Baker Hughes, a GE Company (NYSE: BHGE) is likely to be considered a GE company for a shorter period than originally had been anticipated. With General Electric Co. (NYSE: GE) divesting its assets, including a more rapid exit from energy, Baker Hughes has received two rather positive analyst calls in the first two days of the week.

One call came from Credit Suisse on Tuesday and one was from Goldman Sachs on Monday.

Tuesday’s report from Credit Suisse reiterated an Outperform rating and showed an increased price target to $29 (from $28) along with increased expectations from better LNG sanctioning assumptions.

Credit Suisse’s Jacob Lundberg sees Baker Hughes as being positioned to win the lion’s share of future LNG contract awards. He noted:

Our analysis suggests BHGE has equipment on ~85% of the global installed base and has won ~80% of work since 2004… We increase our BHGE 2020 revenue and EBITDA forecast to $27 billion (from $26 billion) and $3.57 billion (from $3.53 billion).

On Monday, Goldman Sachs started coverage of several oilfield services stocks, and Baker Hughes was among the most positive in the group. Baker Hughes was added to the prized Conviction Buy list in the Goldman Sachs call with a $36 price target. The note that current valuations are now tracking back at historical lows of the range at the same time that free cash flow is strong.

Angie Sedita of Goldman Sachs believes that the services group can deliver a compounded annual growth rate of 15% to 30% to the bottom line for the years 2019 to 2021.

Shares of Baker Hughes were last seen trading up $0.15 at $26.65 on Tuesday, but that’s after an even larger $0.77 gain to $26.50 on Monday. Its 52-week trading range is $20.09 to $37.76.