Baker Hughes Co is an international oilfield products and services company that provides a wide range of services and products to the oil and gas industry, including drilling and evaluation services, completion and production services, digital solutions and turbomachinery and process solutions.
The company saw a strong start to the year, with adjusted earnings per share (EPS) surging 87% and revenue adding 18% for 1Q23, both ahead of expectations. Management's outlook remains upbeat, despite oil demand concerns amid mounting expectations for a recession in the short-term. The company remains well-positioned to benefit from the global energy transition, with its focus on providing energy and industrial companies with more efficient, reliable, and cleaner technologies and solutions.
Technically, an ascending channel pattern makes the stock an attractive investment opportunity (see the red and green upward sloping trendlines as well as the insert). Investors may use such a pattern to identify potential buying or selling opportunities, such as buying the stock when the price approaches the lower boundary (support level) of the channel. We anticipate that the price will continue to rise from current levels.
Fading downside price momentum according to the MACD indicator, as well as the recent upwards movement of the OBV indicator, supports our bullish stance.
We suggest a low at-risk allocation for this trade and apply a medium technical rating to the analysis.
Share Information
| Share code | BKR |
|---|---|
| Industry | Oil & gas equipment and services |
| Market capatalisation (USD) | 30.03 billion |
| One year total return | -5.58% |
| Return year-to-date | 1.05% |
| Current price(USD) | 29.66 |
| 52 weeek high(USD) | 38.66 |
| 52 week low(USD) | 20.42 |
| Financial year end | December |
| Closing paragraph | The stock is trading above its 200-day simple moving average- a bullish signal. We expect moderate to high price volatility going forward. |
Consensus Expectations (Bloomberg)
| FY22 | FY23E | FY24E | FY25E | |
|---|---|---|---|---|
| Headline Earnings per Share (USD) | 0.91 | 1.56 | 2.05 | 2.53 |
| Growth (%) | 70.88 | 31.58 | 23.41 | |
| Dividend Per Share (USD) | 0.73 | 0.76 | 0.79 | 0.74 |
| Growth (%) | 4.25 | 4.20 | -6.43 | |
| Forward PE (times) | 19.07 | 14.50 | 11.75 | |
| Forward Dividend Yield (%) | 2.57 | 2.67 | 2.50 | |
| Closing paragraph | Medium-term growth prospects remain strong, with the outlook for energy services remaining robust. | |||
Buy/Sell Rationale
Technical Analysis:
Fundamental view:
| Share Name and position |
CBOE - Profit Take (Close the position) |
MA - Buy (Continue to hold) |
PEP - Buy (Continue to Hold) |
|---|---|---|---|
| Entry | 127.18 | 354.44 | 178.01 |
| Current | 138.72 | 375.00 | 185.33 |
| Movement | 9.1% | 5.8% | 4.1% |
| Summary text | Exit the trade to reduce overall portfolio exposure. |
The stock price is showing an incomplete ascending triangle pattern and trading above its 200-day simple moving average. Upside momentum supports the bullish trend.
Our profit target is $395.00, with a trailing stop-loss of $358.50. Time exit: 26 May 2023. |
A stable bullish trend remains of interest. The stock price remains above its 200-day simple moving average. Upside momentum supports the bullish trend.
Our profit target is $200.00 with a trailing stop-loss of $179.50. Time exit: 10 May 2023. |
| Share Name and position |
MSFT - Buy (Continue to Hold) |
KO - Buy (Continue to hold) |
BDRY - Buy (Continue to hold) |
|---|---|---|---|
| Entry | 276.20 | 61.85 | 9.05 |
| Current | 286.11 | 63.96 | 9.25 |
| Movement | 3.6% | 3.4% | 2.2% |
| Summary text |
The price recently breached a major resistance level. The stock is trading above its 200-day simple moving average, but upside momentum has halted - a concern to the bullish trend.
Our profit target is $300.00, with a trailing stop-loss of $268.00. Time exit: 9 June 2023. |
A symmetrical triangle pattern during a prior uptrend continues to be noteworthy. Remains above its 200-day simple moving average. Upside price momentum supports the bullish trend.
Our profit target remains at $67.00, with a trailing stop-loss at $62.00. Time exit: 16 June 2023. |
The price is in accumulation phase and remains just below its 200-day simple moving average. Fading upside momentum is a concern.
Our profit target remains at $12.00, with a trailing stop-loss at $8.00. Time exit: 21 June 2023. |
