On Monday, Goldman Sachs (NYSE:GS) increased its price target on Baker Hughes (NASDAQ:BKR (NASDAQ:BKR)) to $43.00 from the previous $39.00 while keeping a Buy rating on the stock. The firm's analyst highlighted Baker Hughes' defensive portfolio, which includes more industrial offerings, as a key factor in driving the company's relative outperformance in the market.
Baker Hughes has been noted for its strong order performance across various end markets and geographies, including an uptick in new energy orders and non-LNG awards. These factors are expected to contribute to the company's unique growth prospects in the coming years.
The management team at Baker Hughes has also been recognized for improving operations and streamlining the business, which has positively impacted margins. This operational efficiency, according to Goldman Sachs, supports the company's ambitious targets for 2025/2026.
Goldman Sachs commends the company's focus on generating free cash flow and returning capital to shareholders. These attributes are anticipated to support Baker Hughes' stock in outperforming its peers, which are more sensitive to fluctuations in activity levels.
Baker Hughes secured approximately $6.4 billion in IET orders in the first half of 2024, keeping it on track to meet its full-year inbound IET order target. The company also reported strong New Energy orders totaling $445 million in the second quarter, with year-to-date orders reaching $684 million.
Looking at other rating agencies, JPMorgan (NYSE:JPM) increased Baker Hughes' price target to $43, maintaining an Overweight rating. Citi also raised its price target to $44.00, citing the company's exceptional performance in the second quarter. However, BofA Securities adjusted its outlook by lowering the price target from $40.00 to $38.00, and UBS maintained a Neutral stance with a price target of $37.00.
Additionally, Baker Hughes increased its quarterly cash dividend to $0.21 per share, a 5% rise from the same quarter of the previous year. The company is exploring the implementation of microgrid solutions in the Permian Basin, a move that could potentially lower emissions and enhance power reliability for oil and gas operators. These are recent developments that have shaped the company's current standing in the market.
InvestingPro Insights
As Goldman Sachs sets a bullish tone on Baker Hughes, real-time data from InvestingPro aligns with the positive outlook. Baker Hughes is trading at a P/E ratio of 19.12, which is considered reasonable when paired with its near-term earnings growth. The company's stock has also experienced a noteworthy price uptick of 27.25% over the last six months, which could be indicative of strong market confidence. With revenue growth of 16% over the last twelve months as of Q2 2024, Baker Hughes has shown robust financial performance.
InvestingPro Tips highlight that Baker Hughes has maintained dividend payments for 38 consecutive years, which is a testament to its financial stability and commitment to shareholder returns. Additionally, analysts have revised their earnings upwards for the upcoming period, signaling potential continued growth. For readers looking to dive deeper into the financial nuances of Baker Hughes, there are 9 additional InvestingPro Tips available, offering a more granular analysis to guide investment decisions.
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