Expanding Distributed Power And New Energy Will Define Long-Term Trends

Analysts have raised Baker Hughes’ price target slightly to $50.55, citing strong revenue growth and diversification in the IET segment, a transformative acquisition of Chart Industries, robust order backlog, and secular industry tailwinds, though some caution lingers due to oilfield services underperformance and regional uncertainties.

Analyst Commentary

• Bullish analysts highlight Baker Hughes’ rapid expansion and revenue growth in its Industrial & Energy Technologies (IET) segment, now comprising a majority of total revenues, driven by strength in non-oil and gas end-markets.
• The acquisition of Chart Industries is broadly seen as transformational, accelerating Baker Hughes' diversification beyond oilfield services, strengthening long-term positioning, and providing achievable synergy targets at a reasonable acquisition price.
• Several upgrades cite robust Q2 results, with revenue and EBITDA guidance in line with or slightly above consensus, sustained order flow, and growing backlog in IET supporting increased visibility and resilience against commodity price volatility.
• Positive outlook is reinforced by secular shifts such as AI-driven transformation in the energy and power sectors and rising data center demand, viewed as new catalysts for order growth.
• Bearish analysts remain cautious due to recent oilfield services underperformance relative to the S&P 500, lingering uncertainties in major markets like Saudi Arabia and Mexico, and the expectation that shares may remain range bound unless earnings estimates improve.

What's in the News

• Baker Hughes is nearing a $13.6 billion all-cash acquisition of Chart Industries, disrupting Chart’s previous $19 billion all-stock merger agreement with Flowserve; the deal would significantly enhance Baker Hughes’ presence in LNG, nuclear energy, and data centers, and carries a 22% premium over Chart’s prior market cap (Financial Times, Key Developments).
• Chart Industries’ share price surged 16.5% following news of Baker Hughes’ higher offer, while Flowserve’s shares also climbed in after-hours trading as the prior merger was terminated (Financial Times, Key Developments).
• Baker Hughes has secured a comprehensive 90-month service agreement with bp for the Tangguh LNG plant in Indonesia, covering critical turbomachinery and reinforcing its strategic role in LNG support and asset management services in the Asia-Pacific region (Key Developments).
• Commonwealth LNG has authorized an order for six Baker Hughes refrigerant turbo compressors, to be powered by LM9000 gas turbines, for its 9.5 mtpa LNG export facility in Louisiana, marking a significant project milestone (Key Developments).
• Between April and June 2025, Baker Hughes repurchased 5.3 million shares for $196 million, bringing its total completed buybacks since October 2021 to 88.6 million shares (9.25% of shares outstanding) for $2.67 billion (Key Developments).

Valuation Changes

Summary of Valuation Changes for Baker Hughes

• The Consensus Analyst Price Target remained effectively unchanged, moving only marginally from $50.10 to $50.55.
• The Future P/E for Baker Hughes remained effectively unchanged, moving only marginally from 20.98x to 21.21x.
• The Discount Rate for Baker Hughes remained effectively unchanged, moving only marginally from 7.67% to 7.73%.