Baker Hughes Is A "Show Me" Stock Likely To Lag Its Peers For Another Quarter Or Two, Analyst Touts

  • Wells Fargo analyst Roger Read downgraded Baker Hughes Co BKR from Overweight to Equal-Weight with a $29 price target, down from $32.
  • Read writes that the Energy Services sector is on track to deliver consistent sequential and year-on-year earnings and cash flow improvements as global E&P spending trends higher in 2023 and 2024. 
  • Macroeconomic headwinds may persist, but energy security and overall global oil & gas supply challenges (sanctions and lack of spare capacity) have created a sustained undersupply situation, which should support commodity prices and upstream investment. 
  • Notably, the analyst shifted valuation metrics for the Energy Service sector to mid-cycle as he believed the Energy Services sector should outperform the broader market. 
  • The stock has outperformed the broader market year-to-date, which reflects its energy-centric positioning. 
  • He saw Baker as a "show me" stock "that could easily continue to lag its peers for another quarter or two." 
  • He reduced valuation multiples and downgraded the shares.
  • Price Action: BKR shares traded higher by 1.74% at $26.55 on the last check Wednesday.
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