Baker Hughes (BKR): Valuation Check After New Multi‑Year Digital Oilfield Deal With Kuwait Oil Company
Baker Hughes (BKR) just landed a multi year deal with Kuwait Oil Company that leans heavily on its artificial lift and digital production tech, a contract that could quietly strengthen its long term earnings base.
See our latest analysis for Baker Hughes.
Even with a soft patch lately, including a 30 day share price return of minus 7.8 percent, Baker Hughes still sports a 5 year total shareholder return of roughly 142 percent. This suggests long term momentum remains intact as contracts like Kuwait add to earnings visibility.
If this Kuwait deal has you thinking about where else energy tech is reshaping returns, it is a good time to scan aerospace and defense stocks as another corner of the industrial cycle.
With shares still trading at a material discount to analyst targets and intrinsic value estimates despite solid earnings growth, investors now face a key question: is Baker Hughes undervalued or already priced for its next leg of growth?
Most Popular Narrative Narrative: 15.9% Undervalued
With Baker Hughes last closing at $44.71 against a narrative fair value near $53.14, the story leans toward meaningful upside if the assumptions land.
The analysts have a consensus price target of $50.545 for Baker Hughes based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $60.0, and the most bearish reporting a price target of just $37.0.
Want to see what justifies paying a richer future earnings multiple for a business with flat profits and only modest revenue growth? The key is how this narrative blends slowing margins, steady buybacks, and a higher valuation bar to still argue for double digit upside. Curious which assumptions do the heavy lifting in that fair value math? Read on and decide if the expectations feel realistic.
Result: Fair Value of $53.14 (UNDERVALUED)
Have a read of the narrative in full and understand what's behind the forecasts.
However, several risks could derail that upside, including sharper oil and gas spending cuts and policy shifts that undercut LNG and data center driven demand.
Find out about the key risks to this Baker Hughes narrative.
Build Your Own Baker Hughes Narrative
If this storyline does not quite match your view, or you prefer digging into the numbers yourself, you can shape a custom narrative in just minutes: Do it your way.
A good starting point is our analysis highlighting 4 key rewards investors are optimistic about regarding Baker Hughes.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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