Baker Hughes upped at Wells Fargo as oilfield services set for strong recovery
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Baker Hughes (NASDAQ:BKR
-2.5%) is upgraded to Overweight from Equal Weight with a $43 price target, raised from $28, at Wells Fargo, which cites prospects of a split into two separate companies, an improved outlook for liquefied natural gas orders, and improvements in global oilfield services operations (NYSEARCA:OIH).
The sell-down by former parent General Electric is closer to its end, which Wells Fargo analyst Roger Read says will relieve pressure on the stock price, and since Baker Hughes already boasts a strong balance sheet, incremental cash flows likely will flow to the dividend and share buybacks rather than debt reduction.
Read believes the early stages of fallout from the Russia-Ukraine conflict already have helped Baker Hughes, particularly in LNG, with actual orders for new liquefaction facilities as a replacement in Europe for natural gas exports from Russia.
With international oilfield services markets "poised for strong and durable recoveries through year-end 2023 at a minimum," Read maintains Overweight ratings for Schlumberger (SLB
-1.7%) and Chart Industries (GTLS
-1%), while rating Halliburton (HAL
-1.3%) and Liberty Oilfield Services (NYSE:LBRT
+0.6%) at Equal Weight, and NOV Inc. (NOV
-0.6%) at Underweight.
Shares of Baker Hughes and other oilfield services stocks have been trading near multiyear highs as crude oil prices soar.