On Thursday, RBC Capital Markets updated its outlook on shares of Baker Hughes (NASDAQ: NASDAQ:BKR), raising the price target to $49.00 from the previous $43.00. Currently trading at $42.46 and near its 52-week high of $45.17, the stock has shown impressive momentum with a 33.25% return over the past six months.
The firm maintained its Outperform rating on the energy technology company's stock. The new price target reflects an increased valuation multiple, now set at 10.0x up from 9.0x, applied to the firm's 2025 EBITDA estimate. According to InvestingPro, Baker Hughes boasts 12 bullish signals, including a perfect Piotroski Score of 9, indicating strong financial health.
The adjustment in valuation is attributed to the company's clearer path to long-term growth, especially in the Gas Technology sector. This optimism appears well-founded, with Baker Hughes achieving 11.08% revenue growth in the last twelve months and maintaining a healthy gross profit margin of 21.1%.
The optimism is based on Baker Hughes' potential to leverage self-help opportunities, its strategic positioning to grow in multiple markets, and the possibility of further margin improvements in the future. For deeper insights into Baker Hughes' growth metrics and valuation analysis, explore the comprehensive Pro Research Report available on InvestingPro.
RBC Capital's assessment also includes a sum-of-the-parts (SOTP) analysis focusing on Baker Hughes' Oilfield Services & Equipment (OFSE) and Industrial & Energy Technology (IET) businesses. The analysis supports the target multiple, reinforcing the firm's confidence in Baker Hughes' valuation and prospects.
The analyst noted the discussions with company representatives that emphasized Baker Hughes' strategies for unlocking value and positioning for growth. These factors collectively contribute to the firm's positive stance on the stock and the decision to raise the price target.
Baker Hughes has been recognized for its ability to navigate the energy market's challenges and opportunities, with RBC Capital's latest price target adjustment reflecting a bullish view on the company's financial performance and market position heading into 2025.
In other recent news, Baker Hughes, a global energy technology firm, has 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, and EBITDA margins reaching 17.5%, the highest since 2017. Despite a slight revenue miss of just over $200 million due to project delays, the company expects recovery in Q4 and Q1.
Furthermore, Baker Hughes has significantly expanded its operations in Namibia with a new liquid mud plant at Walvis Bay Port, currently the largest of its kind in the country. The company has also secured significant contracts with Brazilian state-run oil company Petrobras to supply flexible pipe systems for Brazil's pre-salt oilfields. These are recent developments in the company's performance and growth.
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