Shares of Baker Hughes Jump Over 6% on Earnings Beat; Target Price $30  

Baker Hughes shares rose as much as 6% on Thursday after the global leader of energy technology reported better-than-expected earnings and revenue in the fourth quarter on higher oil and gas prices.

The U.S. oil field services firm reported quarterly adjusted earnings of $0.25 per share for the quarter ended in December, beating the Wall Street consensus estimates of $0.28 per share. The energy services firm said its revenue jumped 0.4% to $5.52 billion from a year ago. That too beat the analysts’ expectations of $5.49 billion.

The company reported adjusted operating income (a non-GAAP measure) of $571 million for the quarter, up 42% sequentially and up 23% year-over-year and adjusted EBITDA* (a non-GAAP measure) of $844 million for the quarter was up 27% sequentially and up 10% year-over-year.

Baker Hughes stock rose over 6% on Thursday. The stock surged nearly 14% so far this year.

Analyst Comments

“Beat on low expectations and very strong orders sets up well for 2022. EBITDA 7% ahead of cons. with upside in all but DS. TPS orders of ~$3B well ahead resulting in 19% growth in ’21 vs “flat” guidance. Sets up well for ’22 TPS revenue, though we wonder if there was any pull forward from ’22 orders previously guided to double-digit growth,” noted Marc Bianchi, equity analyst at Cowen.

Baker Hughes Stock Price Forecast

Ten analysts who offered stock ratings for Baker Hughes in the last three months forecast the average price in 12 months of $30.44 with a high forecast of $34.50 and a low forecast of $26.00.

The average price target represents a 10.37% change from the last price of $27.58. From those ten analysts, six rated “Buy”, four rated “Hold” while none rated “Sell”, according to Tipranks.

Morgan Stanley gave the base target price of $30 with a high of $40 under a bull scenario and $20 under the worst-case scenario. The investment bank gave an “Overweight” rating on the energy technology company’s stock.

“Upstream businesses benefitting from ongoing recovery: Baker Hughes’ (BKR) Oilfield Services and Oilfield Equipment businesses should drive meaningful earnings growth in 2022-23 as upstream activity recovers from the COVID-19 pandemic. BKR’s heavy int’l focus is favourable, in our view,” noted Connor Lynagh, equity analyst at Morgan Stanley.

“Unique portfolio drives differentiated growth opportunities: BKR’s Turbomachinery & Process Solutions (TPS) business is unique in our coverage in its dominant market position and defensible technological advantage. It should benefit from both a meaningful LNG market recovery and provide a platform for energy transition opportunities like carbon capture projects and hydrogen supply chain development.”

Several other analysts have also updated their stock outlook. Piper Sandler raised the target price to $36 from $34.5. Zephirin Group cut the price objective to $25 from $30. HSBC lifted the target price to $24.1 from $21.1. Stephens upped the target price to $30 from $28.

Technical analysis also suggests it is good to buy as 100-day Moving Average and 100-200-day MACD Oscillator signals a strong buying opportunity.

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