Baker Hughes Boosts Long-Term Outlook as LNG, Power Orders Fuel Growth, RBC Says
Baker Hughes (BKR) reported a stronger-than-expected Q2 and raised its long-term industrial energy technology order outlook, supported by surging demand for power-generation equipment and liquefied natural gas infrastructure, RBC Capital Markets strategists said in a note on Monday.RBC analysts said the oilfield services and energy technology firm posted adjusted earnings before interest, taxes, depreciation and amortization of $1.23 billion in Q2, up 6% from the previous quarter and above the top end of its guidance range for the second consecutive period.Free cash flow reached $1.05 billion, more than double RBC's estimate of $498 million, reinforcing management's expectation that cash conversion will approach 50% for the year.Baker Hughes shares gained support from strong momentum in its Industrial & Energy Technology division, which has become a key growth driver as global demand rises for LNG capacity, data-center power and energy infrastructure.RBC said that the company secured $7.1 billion in IET orders during the quarter, exceeding expectations.Power Systems accounted for $2.6 billion of the new orders, covering 2.7 gigawatts of generation capacity. The contracts included turbine and generator equipment for oil and gas operations as well as data-center applications in North America.The company also booked $1.8 billion in LNG equipment orders across projects involving Venture Global's (VG) CP2 facility, Golar LNG's (GLNG) FLNG project and Cheniere Energy's (LNG) Sabine Pass LNG facility.Following the strong order intake, Baker Hughes increased its IET Horizon 2 order target for 2026/28 to more than $45 billion, from a previous target of $40 billion.The energy firm also said it plans to expand power systems revenue capacity to $5 billion per year by 2029, compared with about $1 billion generated in 2025.RBC analysts expect the company's multi-year growth and margin expansion to be driven primarily by IET.For Q3, Baker Hughes forecasted EBITDA of about $1.21 billion, while reaffirming its full-year 2026 EBITDA midpoint of $4.85 billion.The company's implied Q4 outlook assumes Middle East activity remains at Q2 levels, a more cautious stance compared with some industry peers.RBC raised its 2026 EBITDA estimate for Baker Hughes to $4.85 billion, while trimming its 2027 forecast by 1% to $5.39 billion due to modestly lower margin expectations.The research firm introduced a 2028 EBITDA forecast of $5.95 billion, representing growth of about 11% year over year.Price: $58.11, Change: $-2.48, Percent Change: -4.09%
