Will This Upgrade Help Baker Hughes (BHI) Today? (Update)

Update (9:35 a.m.): Updated with Monday market open information.

NEW YORK (TheStreet) -- Goldman Sachs upgraded Baker Hughes  (BHI) to "buy" from "neutral" and set a $72 target price. The firm noted the company should benefit from an improving pressure pumping market. 

The stock was rising 1.12% to $62.49 at 9:32 a.m. on Monday.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

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Separately, TheStreet Ratings team rates BAKER HUGHES INC as a "buy" with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation:

"We rate BAKER HUGHES INC (BHI) a BUY. This is driven by multiple strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures, good cash flow from operations, solid stock price performance and growth in earnings per share. We feel these strengths outweigh the fact that the company has had somewhat disappointing return on equity."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • BHI's revenue growth has slightly outpaced the industry average of 8.3%. Since the same quarter one year prior, revenues rose by 10.0%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • BHI's debt-to-equity ratio is very low at 0.25 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.43, which illustrates the ability to avoid short-term cash problems.
  • Investors have apparently begun to recognize positive factors similar to those we have mentioned in this report, including earnings growth. This has helped drive up the company's shares by a sharp 33.78% over the past year, a rise that has exceeded that of the S&P 500 Index. Looking ahead, the stock's sharp rise over the last year has already helped drive it to a level which is relatively expensive compared to the rest of its industry. We feel, however, that other strengths this company displays justify these higher price levels.
  • BAKER HUGHES INC has improved earnings per share by 14.3% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, BAKER HUGHES INC reported lower earnings of $2.47 versus $2.98 in the prior year. This year, the market expects an improvement in earnings ($4.05 versus $2.47).
  • The company, on the basis of net income growth from the same quarter one year ago, has underperformed that of the Energy Equipment & Services industry, but is on par with that of the S&P 500. The net income increased by 15.9% when compared to the same quarter one year prior, going from $214.00 million to $248.00 million.
  • You can view the full analysis from the report here: BHI Ratings Report

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

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