Freedom Broker: despite a strong quarter, Baker Hughes remains overvalued

Freedom Broker analysts raised the target price for shares of oilfield services company Baker Hughes Co. (BKR) from $48 to $51, but maintained a “Sell” rating. Despite second-quarter results that beat market expectations, the current share price already reflects most of the positive factors. At the current price of $58.4, the target price implies downside potential of about 12.7%.

Baker Hughes (BKR) is one of the world’s largest suppliers of equipment, technology, and services for the oil and gas industry and the broader energy sector. In recent years, the company has been actively transforming its business, focusing on gas infrastructure, LNG, energy equipment, and solutions for data centers, while reducing its dependence on the traditional oilfield services business.

A strong quarter did not change the investment view on Baker Hughes

Freedom Broker analysts noted that they view the company’s quarterly results positively, given the beats on revenue and profit expectations. A multiple-fold increase in orders in the gas technology segment confirms strong long-term demand. However, the shares are still trading above fair value, so the rating remains “Sell,” the experts add.

The company beat consensus forecasts on key financial metrics in the second quarter of 2026. Revenue totaled $6.7 billion, down 2.4% year over year, but came in above market expectations. Net income attributable to shareholders reached $681 million, and diluted GAAP EPS rose to $0.68. Adjusted EPS came in at $0.64, exceeding the consensus estimate by 30.6%. Adjusted EBITDA reached $1.23 billion.

One of the quarter’s biggest achievements was a record level of orders. Total new orders reached $10.5 billion, and the Industrial & Energy Technology (IET, the division that combines gas industry equipment, climate, and industrial solutions) segment received record orders of $7.1 billion. Total backlog increased to $40.1 billion, including $37.1 billion in IET.

Gas technologies are becoming the main growth driver

The primary source of growth remains the Industrial & Energy Technology division. While its quarterly revenue was nearly unchanged at around $3.3 billion, orders for gas equipment increased 3.5x versus last year to $6.2 billion.

Growth is supported by strong global demand for LNG, energy infrastructure development projects, and the rapidly expanding data center market. During the quarter, Baker Hughes received major equipment orders for projects by LNG exporters Venture Global, Cheniere, and Golar, as well as orders to supply gas turbines with total capacity of more than 2 GW for power facilities and data centers in North America.

At the same time, the oilfield services business continues to face pressure. Revenue in the Oilfield Services & Equipment segment declined 4.6% to $3.5 billion. The weakest performance was again in the Middle East and Asia region, where sales fell 12.9% amid geopolitical tensions.

A major deal will strengthen the outlook but increase leverage

In July, Baker Hughes completed the acquisition of Chart Industries, a manufacturer of equipment for the power sector, the gas industry, and cryogenic technologies, valued at $13.6 billion. The company gained one of the largest producers of equipment for liquefaction, storage, and transportation of industrial and energy gases, significantly strengthening Baker Hughes’ position in the fast-growing LNG and energy infrastructure market.

At the same time, analysts expect a noticeable increase in interest expenses and leverage as early as the third quarter. To finance the deal, Baker Hughes previously announced the issuance of bonds totaling $10 billion. In the near term, management intends to focus on debt reduction, so analysts do not expect the share buyback program to resume or dividends to be increased this year.

Why analysts maintain a “Sell” rating on Baker Hughes shares

Freedom Broker raised its target price for Baker Hughes shares to $51, reflecting strong quarterly results and the long-term potential of the industrial and energy technology segment. However, even after the revision, the target price remains below the current market value, implying downside potential of about 12.7%.

According to analysts, further business growth will largely depend on the development of LNG projects, energy infrastructure, and data center equipment. At the same time, pressure on the oilfield services segment, higher leverage following the Chart Industries acquisition, and ongoing geopolitical uncertainty limit the shares’ investment appeal at current levels.

Previous Baker Hughes results

In April 2026, analysts had already noted an ускорение of Baker Hughes’ transformation toward industrial and energy technologies. At that time, the company also beat market expectations for revenue and profit thanks to strong demand for equipment for LNG and energy projects. At the same time, analysts pointed to weakness in the oilfield services business, rising leverage in connection with preparations for the Chart Industries acquisition, and lowered the stock rating to “Sell” while raising the target price from $44 to $48.

This is not an individual investment recommendation.