BKR Stock Forecast & Price Target

Baker Hughes has demonstrated a robust trajectory, with new energy orders rising to $1.3 billion—reflecting a 70% year-over-year increase—and projected to grow further to $1.4-$1.6 billion by 2025. The company’s industrial and energy technology (IET) segment reported operating income exceeding estimates by 11%, bolstered by an 8% increase in revenue and improved margins, positioning the firm favorably amidst rising industry utilization and service demand. Additionally, management's positive outlook for 2025, supported by $12.5-$14.5 billion of IET orders, indicates a strategic trajectory that aligns well with market dynamics, contributing to shareholder returns through enhanced dividends.

Baker Hughes faces a negative outlook due to anticipated declines in global upstream spending and drilling activity, particularly in North America and key international markets such as Mexico and Saudi Arabia, which are expected to result in reduced revenues and lower fixed cost absorption. The firm has identified risks such as reduced industry activity, challenges in achieving returns on energy transition investments, and increased regulatory pressures, which could further weigh on its operational results. Additionally, while Baker Hughes aims for a 20% EBITDA margin target and significant free cash flow returns to shareholders, the challenges in maintaining activity levels and profit margins could hinder its financial performance going forward.