NEW YORK (TheStreet) -- Baker Hughes (BHI) shares are 1% to $55.70 in trading on Wednesday after the oilfield service company was upgraded to "focus stock" from "sector outperform" by analysts at energy investment boutique firm Howard Weil.
The firm currently has a $71 price target on the company's shares, a potential upside of 27.4%.
Oil and oil service stocks have also gained today as the price of a barrel crude oil moved back above five year lows. The price of a barrel of Brent crude rose 1.9% to $61.18 while the price of a barrel of light, sweet crude for January delivery rose 1% to $56.47 on the New York Mercantile Exchange.
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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, growth in earnings per share, increase in net income and notable return on equity. We feel these strengths outweigh the fact that the company shows weak operating cash flow."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- Despite its growing revenue, the company underperformed as compared with the industry average of 15.9%. Since the same quarter one year prior, revenues slightly increased by 8.0%. 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 0.24 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 1.36, which illustrates the ability to avoid short-term cash problems.
- BAKER HUGHES INC has improved earnings per share by 11.7% 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 ($3.95 versus $2.47).
- The net income growth from the same quarter one year ago has exceeded that of the S&P 500, but is less than that of the Energy Equipment & Services industry average. The net income increased by 10.0% when compared to the same quarter one year prior, going from $341.00 million to $375.00 million.
- The stock price has risen over the past year, but, despite its earnings growth and some other positive factors, it has underperformed the S&P 500 so far. The stock's price rise over the last year has driven it to a level which is somewhat expensive compared to the rest of its industry. We feel, however, that other strengths this company displays justify these higher price levels.
- You can view the full analysis from the report here: BHI Ratings Report