Baker Hughes stock price has soared and is now nearing its all-time high, a trend that may continue as demand for its products and services surges. BKR is trading at $63, a few points below the all-time high of $67.
Baker Hughes stock to benefit from the US-Iran war
Oil services companies are set to be some of the top beneficiaries of the ongoing crisis in the Middle East, which has led to the damage of huge plants in the region.
Fields in countries like Qatar, Kuwait, Saudi Arabia, and Bahrain have all had severe damage that will take years to fix.
This damage will lead to more demand across its businesses, including in areas like Industrial & Energy Technology (IET) and Oilfield Services and Equipment.
The most recent results showed that Baker Hughes business continued doing well, helped by key dynamics like power generation, data centers, and gas & power infrastructure. This growth will continue doing well as global power demand soars.
The results showed that its orders jumped to $7.8 billion in the fourth quarter, up by 5% YoY. Its annual orders rose by 5% to over $29.5 billion.
The company’s revenue was flat at $7.3 billion, while its annual figure rose to over $27.7 billion. Most importantly, the company’s profitability growth continued, with the adjusted free cash flow (FCF) rising by 50% to over $1.34 billion.
Baker Hughes revenue and profits will likely continue doing well and will be better than the company’s guidance. Its guidance was that its first quarter revenue will be $6.4 billion, with the two main divisions generating the same amount. The adjusted EBITDA is expected to be over $1.04 billion.
For the year, the management believes that the company will make between $26.2 billion and $28.3 billion, with the midpoint being $27.25 billion. Also, the adjusted EBITDA is expected to be about $4.8 billion.
The upcoming demand for its products and services surge may help to justify the company’s pricey valuation. Data compiled by Seeking Alpha shows that the company’s forward price-to-earnings ratio has risen to 25.1, higher than the sector median of 15. Its multiple is also higher than the five-year average of 22.
Analysts following the company believe that it has more upside to go in the near term. For example, Charles Minervino of Susquehanna recently boosted the target to $70 from the previous $65.
Scott Grueber, a top analyst at Citigroup, boosted the target to $69, while BMO and Evercore boosted to $70.
BKR stock price technical analysis
Baker Hughes stock chart | Source: TradingView
The daily timeframe chart shows that the BKR stock peaked at $66.96 in March this year and then pulled back to $53.85 on March 13 as the Iran war escalated.
It has now bounced back as investors priced in more demand following the destruction of infrastructure in the region.
The stock has remained above the 50-day and 100-day Exponential Moving Averages (EMA). It has also flipped the Supertrend indicator from red to green, while the Relative Strength Index (RSI) moved above the neutral point at 50.
The stock will likely continue rising as bulls target the key resistance level at $66.95, its highest point this year. A move above that level will point to more gains, potentially to the key resistance level at $75. The bearish outlook will become invalid if it drops below $53.85.
The post Will the Baker Hughes stock retest its all-time high soon? appeared first on Invezz
