Wolfe Research Starts Baker Hughes (BKR) at Outperform, 'FcF trajectory being mispriced at an OFS multiple'
Wolfe Research analyst Carlos Escalante initiates coverage on Baker Hughes (NASDAQ: BKR) with a Outperform rating and a price target of $70.00.
The analyst comments "We initiate coverage of BKR at $70/sh. At the simplest level we see BKR's FcF trajectory being mispriced at an OFS multiple, despite an established and growing Industrial & Energy Technology business set to increase to >50% of EBITDA for the first time since it's diversification push started with the GE merger in 2017. The catalyst is the pending closure of its $13.6bn Chart Industries acquisition, awaiting EU regulatory approval, with a decision expected by Jul 10. Management's current guidance sees EBITDA growth of 5-10% through its 'Horizon two' outlook that runs through 2028. But this excludes Chart, which will further accelerate revenue diversification, while bringing a long-term, multi-year project backlog that adds stable cash flows, with growth that reinforces BKR's capacity to target long-cycle, secular growth markets, including LNG, power, data center, and industrial decarbonization. While acquisition synergies are a modest tailwind, we see the combination with a higher margin, less cyclical revenue mix and diversified growth options supporting a multiple premium vs traditional OFS and closer to industrial weighted peers."
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Shares of Baker Hughes closed at $54.47 yesterday.