We initiate a long position with a target price of $35 (reward/risk ratio of 2.2:1). We recommend a stop-loss at $28.
Baker Hughes is a multinational energy technology company that operates in the oil and gas industry. The company offers a wide range of services, including reservoir evaluation, drilling services, formation evaluation, well construction, artificial lift systems, and digital solutions for oilfield operations. They also provide equipment and technology for refining, liquefied natural gas (LNG), and petrochemical processes in the downstream sector.
The company is headquartered in Houston, Texas, and has a global footprint that spans over 120 countries.
Technically, the price seems to be developing a symmetrical triangle pattern in a previous uptrend (see the black converging trendlines as well as the insert). The pattern indicates a period of consolidation and indecision in the market before a potential continuation of the uptrend.
Investors can take advantage of the price oscillations within the triangle by buying near the lower trendline (support) and selling near the upper trendline (resistance).
Additionally, the stock is above its 200-day simple moving average (SMA) of ~$28, signalling a bullish price trend.
Upside price momentum according to the Moving Average Convergence Divergence (MACD) indicator as well as the recent sideways trajectory of the On-balance volume (OBV) indicator provides further support to our bullish view.
Share Performance
Share Information
| Share code | BKR |
|---|---|
| Industry | Energy |
| Market Capital (USD) | 30.54 billion |
| One year total return | -5.90% |
| Return year-to-date | 3.49% |
| Current price(USD) | 30.17 |
| 52 weeek high(USD) | 34.50 |
| 52 week low(USD) | 20.42 |
| Financial year end | December |
| Closing paragraph | The share price has made modest gains year-to-date. With a beta of 1.17 we expect high volatility compared to the market. |
Consensus Expectations (Bloomberg)
| FY22 | FY23E | FY24E | FY25E | |
|---|---|---|---|---|
| Headline Earnings per Share (USD) | 0.91 | 1.55 | 1.98 | 2.39 |
| Growth (%) | 69.78 | 28.22 | 20.49 | |
| Dividend Per Share (USD) | 0.73 | 0.76 | 0.79 | 0.83 |
| Growth (%) | 3.42 | 5.03 | 4.16 | |
| Forward PE (times) | 19.53 | 15.23 | 12.64 | |
| Forward Dividend Yield (%) | 2.50 | 2.63 | 2.74 | |
| Closing paragraph | Growth expectations are robust over the medium term, with demand being bolstered by positive secular trends. | |||
Buy/Sell Rationale
Technical Analysis:
Long-term fundamental view
| Share Name and position | HLMN - BUY (Continue to hold) | VXF - BUY (Continue to hold) | HACK - BUY (Continue to hold) |
|---|---|---|---|
| Entry | 8.01 | 139.26 | 47.58 |
| Current | 9.28 | 148.13 | 50.30 |
| Movement | 15.9% | 6.4% | 5.7% |
| Summary text |
The price continues to display repetitive cycles in sequences. The stock remains above its 200-day simple moving average. Upside momentum supports the trade.
Our profit target is $10 with a trailing stop-loss at $8.60. Exit the position on 6 October 2023. |
An incomplete symmetrical triangle pattern remains of interest. The ETF is trading above its 200-day simple moving average. Upside momentum supports the bullish trend.
Our profit target is $153 with a trailing stop-loss at $142. Exit the position on 2 November 2023. |
The price remains above critical support and trade continues above the 200-day simple moving average. Upside momentum supports the bullish bias.
Our profit target is $55 with a trailing stop-loss of $48.30. Exit the position around 4 August 2023. |
| Share Name and position | LIT - BUY (Continue to hold) | COST - BUY (Continue to hold) | NDAQ - Stop Loss (Close the position) |
|---|---|---|---|
| Entry | 62.48 | 501.27 | 55.03 |
| Current | 65.27 | 522.02 | 51.06 |
| Movement | 4.5% | 4.1% | -7.2% |
| Summary text |
The stock is trading in a falling wedge pattern within a previous uptrend. The stock is testing its 200-day simple moving average. Upward momentum provides support for a bullish price movement.
Our profit target is $71 with a trailing stop-loss at $62. Exit the position on 30 August 2023. |
We continue to observe a confluence of technical indicators that aligns with a bullish trend. The share is trading above its 200-day simple moving average. Upside price momentum supports a bullish bias.
Our profit target is $560, with a trailing stop-loss of $500. Exit the position around 7 July 2023. |
The stock reached our stop-loss level and we closed the position. NDAQ announced that it will acquire Adenza at a demanding valuation. The acquisition is expected to be dilutive and execution risk is high given the deal size. |
