Baker Hughes Company (BKR), founded in 1987 and headquartered in Houston, Texas, is one of the world’s largest oilfield service providers. Valued at $32.9 billion by market cap, the company provides advanced solutions to improve efficiency, reliability, and sustainability in the energy and industrial sectors. It specializes in gas technology equipment and solutions for the refining and transportation of hydrocarbons. The company offers services for oilfield operations, including drilling, completions, and maintenance.
Companies worth $10 billion or more are generally described as "large-cap stocks," and Baker Hughes fits right into that category with its market cap exceeding this threshold, reflecting its substantial size, influence, and dominance in the energy sector. Baker Hughes' expansion into geothermal and carbon capture, utilization, and storage (CCUS) strengthens its position in the energy sector.
Baker Hughes slipped 12.4% from its 52-week high of $37.58, achieved on Sep. 5, 2023. BKR stock saw a decline of 2.5% in the past three months, compared to the S&P 500 Energy Sector SPDR’s (XLE) 3.1% decline in the same time frame.
In the longer term, Baker Hughes’ stock is down 3.7% on a YTD basis, but it has returned 8% over the past 52 weeks, significantly lagging behind XLE, which is up 7.1% in 2024 and gained 13.6% over the past 52 weeks.
However, Baker Hughes’ stock has traded below its 200-day moving average since mid-April and below its 50-day moving average since late May with slight fluctuations.
Baker Hughes' underperformance relative to the broader energy sector can be attributed to the supply chain constraints in the Industrial & Energy Technology segment, where the aero-derivative supply chain has continued to show signs of tightness.
Nonetheless, BKR stock climbed 1.7% on April 23 following the release of Q1 earnings. The company reported a 12.3% year-over-year rise in revenue to $6.4 billion, driven by growing demand for its drilling services overseas. Moreover, the company has been consistently beating the consensus earnings estimate for the past four quarters, which is impressive.
BKR’s rival, Kinetik Holdings Inc. (KNTK), has significantly outperformed Baker Hughes. KNTK’s stock is up 19.3% in 2024 and has generated a return of 17.1% over the past 52 weeks.
Despite the stock’s underperformance relative to XLE, Wall Street analysts remain bullish on BKR’s prospects. The stock holds a consensus “Strong Buy” rating from the 21 analysts covering it. The mean target of $40.85 suggests a potential upside of 24.1% from the current price levels.
On the date of publication, Kritika Sarmah did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
