Is BKR a good stock to buy? We came across a bullish thesis on Baker Hughes Company on Astute Optics – US’s Substack. In this article, we will summarize the bulls’ thesis on BKR. Baker Hughes Company’s share was trading at $56.45 as of October 13th 2026. BKR’s trailing and forward P/E were 18.66 and 17.95 respectively according to Yahoo Finance.
This isn’t the first time we see an energy technology company pitched as a great investment. BKR shares gained 26.94% over the last 12 months. Comparable stocks like SLB and Halliburton gained 49.74% and 46.45%, respectively, during the same period. Why are oilfield services stocks rising so much and is it really a good time to buy them?
SSR Mining (SSRM) Reports Q1 Adjusted EPS Beat
Christian Lagerek/Shutterstock.com
In July, we published an article about the 10 Oversold NASDAQ Stocks to Invest in Right Now and BKR ranked #7 in that article. While BKR has edged slightly lower since then, this article on the 14 Best Oil and Gas Stocks to Buy According to Hedge Funds explains why hedge funds favor the sector. Before getting into our analysis, let’s take a look at the business and why some investors like the stock so much.
Baker Hughes Company (NASDAQ:BKR) provides energy technology, oilfield services, and industrial equipment through two main businesses: Oilfield Services & Equipment (OFSE), which supports drilling, completions, and subsea production, and Industrial & Energy Technology (IET). The investment case increasingly depends on IET as Baker Hughes reduces its reliance on traditional drilling cycles, adding exposure to long-cycle gas, LNG, data-center power, and industrial energy infrastructure.
Read More: 15 AI Stocks That Are Quietly Making Investors Rich
Read More: Undervalued AI Stock Poised For Massive Gains: 10000% Upside Potential
In the second quarter, Baker Hughes generated $6.75 billion in revenue and $1.23 billion in adjusted EBITDA, a record 18.3% margin. However, trailing twelve-month revenue growth has been nearly flat at just 0.4%, and recent earnings fell 4.2%. At $59.40 a share, the stock trades at 19.1 times trailing earnings, cheaper than the peer median of 26.4 times, and 22.6 times forward earnings. In short, investors are betting that growth in IET can make up for weak earnings momentum elsewhere in the business.
The bullish case centers on IET becoming a bigger, more profitable part of Baker Hughes. Total orders jumped 49% year over year to $10.5 billion in the second quarter, and IET orders alone hit a record $7.1 billion, roughly double what they were a year earlier. That included $2.6 billion in power-systems awards, such as gas turbines for data centers and mobile power, plus $1.8 billion in LNG equipment orders. These long-cycle projects should support equipment sales now and higher-margin service revenue later, helping offset some of the ups and downs in traditional oilfield work.
Management raised its full-year 2026 guidance to roughly $27.35 billion in revenue and $4.85 billion in adjusted EBITDA, and now expects IET orders of $17.5 billion to $19.5 billion (see why investors weren’t impressed by Baker Hughes’ raised 2026 guidance). Baker Hughes also closed its $13.6 billion all-cash acquisition of Chart Industries (NYSE:GTLS) on July 16, creating a new industrial-gases and LNG segment and targeting $325 million in annual cost savings within three years. Because the deal closed after the second quarter ended, Chart Industries isn’t reflected in the numbers above, and third-quarter guidance of $6.87 billion in revenue and $1.2 billion in adjusted EBITDA also excludes it. The coming quarters will show whether the acquisition can add growth and margin without integration headaches.
Wall Street is largely optimistic: the average analyst price target of $72.13 implies about 21% upside from current levels, with targets ranging from $51 to $85. That target assumes Baker Hughes can grow earnings per share to roughly $3.19, about 21% above the current forward estimate of $2.63. The company’s balance sheet remains solid, with $3.8 billion in operating cash flow and $2.5 billion in free cash flow generated in fiscal 2025, and more cash on hand than debt. Still, with earnings down year over year, that upside depends on an earnings recovery materializing.
The bigger risk is that the shift toward IET simply takes longer than expected. The OFSE business has already been hurt by disruptions in the Middle East, and weaker spending from national oil companies or falling commodity prices could add more pressure. Export controls and geopolitical restrictions could also complicate international deliveries, while a broader oversupply of oil and gas could push customers to spend less. On top of that, integrating Chart Industries brings its own execution risk. Profitability metrics look reasonably healthy versus peers, but with revenue barely growing and forward earnings estimates below trailing levels, Baker Hughes will need to actually deliver on IET growth, Chart synergies, and aftermarket expansion to justify its current valuation.
Another risk for the stock is cost overruns on long-cycle equipment contracts. Winning large LNG and power-system orders does not guarantee attractive profits when the equipment is delivered. Rising material costs, engineering changes, or extra testing could make projects more expensive than expected. Baker Hughes warns that meeting technical specifications may require costly product modifications. Its industrial growth story depends on completing these orders at profitable margins. Higher revenue could therefore deliver weaker earnings if project costs exceed initial estimates. In our opinion, this could pressure Baker Hughes’ price multiples if its record orders fail to produce the expected profit growth.
Hedge fund positioning shows a mixed signal. As per our database, 74 hedge funds held Baker Hughes at the end of the second quarter, up from 72 in the previous quarter. This modest increase suggests institutional investors remain cautiously supportive of the IET order momentum and long-term earnings potential, even with slow revenue growth and integration risk in the picture. By comparison, SLB was held by 79 hedge funds, up from 74, Halliburton (NYSE:HAL) was held by 76 hedge funds, up from 72, and TechnipFMC (NYSE:FTI) was held by 47 hedge funds, down from 58. That leaves Baker Hughes with less aggressive institutional buying than SLB (NYSE:SLB) and Halliburton, though still stronger conviction than Techni
Source: finance.yahoo.com — article syndicated from the publisher’s feed; all rights remain with the original publisher.
