-- Baker Hughes Company (BKR) reported stronger-than-expected first-quarter earnings, driven by robust demand in its Industrial & Energy Technology and gas-processing equipment segment, RBC Capital Markets strategists said in a note Friday.
The oilfield services firm posted adjusted EBITDA of $1.16 billion for the quarter, up 12% from a year earlier and slightly above the top end of its guidance range of $980 million to $1.14 billion.
RBC analysts said growth was buoyed by the IET division, which delivered EBITDA of $678 million, beating the company's forecast range of $600 million to $650 million.
Margins in the segment rose to 20.2%, up 310 basis points year-on-year, supported by stronger pricing on backlog conversion and improved project execution.
Orders in the IET segment remained a bright spot, with bookings totaling $4.9 billion in the quarter, resulting in a book-to-bill ratio of 1.5.
Baker Hughes signaled increasing confidence in the duration and quality of its order book, pointing to potential upside to its full-year revenue midpoint guidance of $14.5 billion and its longer-term target of more than $40 billion.
RBC analysts said that the strength in orders and backlog supports a more constructive medium-term outlook, raising their 2027 EBITDA estimate by 3%.
Baker Hughes maintained its Q2 EBITDA guidance at about $1.13 billion and left its full-year 2026 outlook unchanged, though it expects results to come in below the midpoint of $4.85 billion.
The guidance assumes ongoing disruption in the Middle East through June, with operations in the Strait of Hormuz returning to normal in H2 2026.
RBC analysts said Baker Hughes remains well-positioned to benefit from both traditional energy investment cycles and the growing push toward new energy technologies, particularly as supply risks in key regions underscore the need for redundancy and diversification.
RBC maintained an "outperform" rating on the stock and raised its price target to $71 from $68, based on a 12.5 times multiple of its revised 2027 EBITDA forecast.