TD Cowen has adjusted its price target for Baker Hughes (BKR, Financial), lowering it to $49 from $50 while maintaining a Buy rating on the company's stock. This decision reflects Baker Hughes' strategic move to integrate potential macroeconomic vulnerabilities into its future outlook, reportedly making it more cautious compared to its industry peers.
According to the firm, Baker Hughes appears to have taken preemptive measures by factoring in potential weaknesses in the economic environment even before receiving such indicators from its clients. This conservative approach distinguishes its strategy in contrast to the more optimistic projections by other companies in the sector.
Wall Street Analysts Forecast
Based on the one-year price targets offered by 23 analysts, the average target price for Baker Hughes Co (BKR, Financial) is $48.44 with a high estimate of $58.00 and a low estimate of $40.00. The average target implies an upside of 34.97% from the current price of $35.89. More detailed estimate data can be found on the Baker Hughes Co (BKR) Forecast page.
Based on the consensus recommendation from 26 brokerage firms, Baker Hughes Co's (BKR, Financial) average brokerage recommendation is currently 1.9, indicating "Outperform" status. The rating scale ranges from 1 to 5, where 1 signifies Strong Buy, and 5 denotes Sell.
Based on GuruFocus estimates, the estimated GF Value for Baker Hughes Co (BKR, Financial) in one year is $38.03, suggesting a upside of 5.96% from the current price of $35.89. GF Value is GuruFocus' estimate of the fair value that the stock should be traded at. It is calculated based on the historical multiples the stock has traded at previously, as well as past business growth and the future estimates of the business' performance. More detailed data can be found on the Baker Hughes Co (BKR) Summary page.
BKR Key Business Developments
Release Date: January 31, 2025
- Revenue: Record annual revenue for 2024.
- Adjusted EBITDA Margin: Increased by 1.8 percentage points year on year to 17.8% in Q4.
- Free Cash Flow: $894 million in Q4; record annual free cash flow of $2.3 billion.
- Adjusted Earnings Per Share (EPS): Increased 37% from Q4 2023 and up 47% for the full year.
- Orders: $3.8 billion in Industrial and Energy Technology orders in Q4; $28.2 billion total orders for 2024.
- Net Debt to EBITDA Ratio: 0.6 times at the end of Q4.
- Dividends and Share Repurchases: $1.3 billion returned in 2024, approximately 60% of free cash flow.
- Adjusted Operating Income: $1.02 billion in Q4.
- GAAP Diluted EPS: $1.18 in Q4.
- Effective Tax Rate: Declined by approximately 5 percentage points to 28% for the year.
- Industrial & Energy Technology (IET) EBITDA: $2.1 billion for the full year, setting a record.
- Oilfield Services & Equipment (OFSE) EBITDA Margin: Expanded 1.5 percentage points to 18.4% for the full year.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Baker Hughes Co (BKR, Financial) reported strong fourth-quarter results, exceeding the midpoint of their EBITDA guidance for the eighth consecutive quarter.
- The company set new quarterly and annual records for revenue, free cash flow, and adjusted measures of EPS, EBITDA, and EBITDA margin.
- Baker Hughes Co (BKR) achieved significant margin expansion, with adjusted EBITDA margins increasing by 1.8 percentage points year on year to a record of 17.8%.
- The company generated strong free cash flow of $894 million during the quarter, resulting in a record annual free cash flow of $2.3 billion.
- Baker Hughes Co (BKR) announced a 10% increase in their dividend, marking the fourth consecutive year of dividend growth, demonstrating confidence in the company's earnings and free cash flow durability.
Negative Points
- The global economy faces economic and geopolitical uncertainties, which could result in uneven global economic growth in 2025.
- Baker Hughes Co (BKR) anticipates global upstream spending to be down slightly in 2025, with North American spending expected to decrease year on year in the mid-single-digit range.
- The company expects international market spending to be flat to down year on year, with potential overhangs from OPEC+ capacity and reduced activity in key markets like Mexico and Saudi Arabia.
- There is some near-term policy uncertainty across several clean technology areas in the United States, which could impact new energy orders.
- Baker Hughes Co (BKR) faces challenges in maintaining its free cash flow conversion target of 45% to 50% due to potential working capital offsets.
