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UBS keeps neutral on Baker Hughes stock as it addresses Permian Basin power needs

Published 05/06/2024, 12:38

On Wednesday, UBS reaffirmed its Neutral stance on Baker Hughes shares, maintaining a price target of $37.00. The focus of the discussion with the company this week centered on the potential advantages Baker Hughes could gain in the burgeoning energy sector within the Permian Basin. The company is in the preliminary stages of deploying its gas turbine technology to enhance power reliability for oil and gas operators in the area.

Baker Hughes is exploring the implementation of microgrid solutions to support the energy demands during peak times or when there are interruptions in power supply. These technological advancements not only aim to bridge power gaps but also have the potential to lower emissions, depending on their application. The company's involvement in these discussions indicates a proactive approach to addressing the energy needs and environmental concerns in the oil-rich Permian Basin.

The analyst noted that Baker Hughes' gas turbine technologies could play a significant role in meeting the increasing power requirements in the Permian Basin. By providing microgrid solutions, Baker Hughes is positioning itself to offer a reliable energy source that can operate during critical times of peak demand or in the event of power shortages.

In addition to serving the oil and gas sector, Baker Hughes sees opportunities for its Industrial Energy Technology (IET) unit to grow by catering to other industrial applications and markets. The versatility of the company's technology allows for potential expansion and diversification, which could contribute to the growth of the IET unit beyond its current focus on Liquefied Natural Gas (OTC:LNGLF) (LNG).

The reaffirmed price target by UBS reflects the company's ongoing efforts to innovate and expand its reach within the energy sector, particularly through its gas turbine technologies and microgrid solutions.

InvestingPro Insights

As Baker Hughes (NYSE:BKR (NASDAQ:BKR)) advances its gas turbine and microgrid technologies in the Permian Basin, the company's financial health and market performance provide a backdrop for understanding its potential growth. With a market capitalization of $31.57 billion, Baker Hughes is positioned as a significant player in the energy sector. The company's P/E ratio stands at 17.84, reflecting investor expectations of future earnings. Notably, Baker Hughes has shown solid revenue growth over the last twelve months as of Q1 2024, with an 18.93% increase, signaling robust business performance.

An InvestingPro Tip highlights that analysts have revised their earnings upwards for the upcoming period, indicating confidence in Baker Hughes' profitability. Moreover, the company's long-standing commitment to shareholders is evident through its 38 consecutive years of dividend payments, complemented by a healthy dividend yield of 2.66% as of the latest data. Baker Hughes' moderate level of debt and low price volatility further suggest a stable investment profile.

For readers looking to delve deeper into Baker Hughes' financial metrics and gain additional insights, there are more InvestingPro Tips available, which can be explored with a subscription. Interested investors can use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription, providing access to an even broader array of professional investment analysis and data.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

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