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."

For an analyst ratings summary and ratings history on Baker Hughes click here. For more ratings news on Baker Hughes click here.

Shares of Baker Hughes closed at $54.47 yesterday.

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