On Friday, Evercore ISI adjusted its outlook on shares of Baker Hughes, a NASDAQ-listed energy technology company, by increasing its price target to $46.00 from $42.00. The firm sustained its Outperform rating on the stock.
The updated price target comes as Baker Hughes shows continued progress and optimization in its operations. The company has been effectively capitalizing on opportunities across several sectors, including Oilfield Services & Equipment (OFSE), Liquefied Natural Gas (OTC:LNGLF) (LNG), New Energies, and Integrated Energy Technology (IET).
Baker Hughes has outlined a strategy that includes executing commercially during a robust energy cycle, leveraging a new organizational structure to enhance performance and returns, developing its new energy portfolio, and focusing on generating strong free cash flow to return to shareholders.
In the previous year, Baker Hughes achieved over $150 million in cost savings and is exploring additional cost reduction opportunities for 2024 and beyond. The company has set ambitious financial targets, aiming for 20% EBITDA margins across OFSE and IET by 2025/2026 and return on invested capital (ROIC) goals of 15% for OFSE and 20% for IET.
Baker Hughes is positioned to gain from a multi-year upswing in the oilfield services industry. The offshore and international markets are expected to drive growth into 2024, coinciding with the early stages of a significant LNG buildout cycle.
Moreover, Baker Hughes' energy transition businesses are anticipated to attract higher valuation multiples over time. The firm's three-time horizon strategy outlines a path for differentiated growth, reinforcing its positive stance on the company's shares.
In other recent news, Baker Hughes, an energy technology company, has announced a 5% increase in its quarterly cash dividend to $0.21 per share. This move, funded by the company's operational cash flow, signifies Baker Hughes' commitment to enhancing shareholder returns.
Meanwhile, BofA Securities adjusted its price target for Baker Hughes from $40.00 to $38.00, maintaining a Buy rating. The revision reflects potential disruptions in the industry due to energy transition, with the new target based on a discounted cash flow valuation method considering the company's projected earnings up to 2030.
In addition, UBS has reaffirmed its Neutral stance on Baker Hughes, maintaining a price target of $37.00. The company is exploring the implementation of microgrid solutions in the Permian Basin, aiming to enhance power reliability for oil and gas operators and potentially lower emissions.
Moreover, Baker Hughes sees growth opportunities for its Industrial Energy Technology unit in other industrial applications and markets. These developments highlight Baker Hughes' proactive approach to addressing energy needs and environmental concerns in the energy sector.
InvestingPro Insights
As Baker Hughes (BKR) garners a favorable outlook from Evercore ISI, real-time data from InvestingPro underscores the company’s financial stability and potential for growth. With a market capitalization of $35.51 billion and a solid P/E ratio of 18.07, Baker Hughes demonstrates a balance of value and profitability. The company's adjusted P/E ratio for the last twelve months as of Q1 2024 stands at 19.87, reflecting steady earnings.
InvestingPro Tips highlight Baker Hughes' consistent performance, noting that the stock typically exhibits low price volatility and has upheld dividend payments for 38 consecutive years, which is a testament to its financial resilience.
Moreover, Baker Hughes operates with a moderate level of debt, allowing for flexibility in its operations and investments. These factors, combined with a near 52-week high trading price and a dividend yield of 2.36%, paint a picture of a company that’s both stable and rewarding for shareholders.
To explore additional InvestingPro Tips that can further guide investment decisions in Baker Hughes, visit https://www.investing.com/pro/BKR. There are 5 more tips available, offering deeper insights into the company's financial health and market position. For those interested in leveraging the full suite of tools and tips from InvestingPro, use the coupon code PRONEWS24 to get up to 10% off a yearly Pro and a yearly or biyearly Pro+ subscription.
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