BKR reported 25Q1 GAAP diluted EPS of $0.40 vs. 24Q1’s $0.45 and my estimate of $0.55. Net income was lower than expected due mostly to a $140 million loss from the change in fair value of certain equity securities. Total revenue of $6.43 billion was essentially flat from a year ago and 1.2% below my estimate. Operating income increased 10% to $752 million on higher services margin and lower SG&A and R&D costs, but was 3.7% below my estimate. Non-GAAP EPS was $0.51, compared with $0.43 last year, but below my estimate of $0.54. Adjusted EBITDA was $1.04 billion, up 10.0% from 23Q4, but 3.1% below my estimate. During the quarter, Ahmed Moghal was named Chief Financial Officer of Baker Hughes, replacing Nancy Buese.
The company booked orders of $6.46 billion in the quarter, down 1.3% YOY, as a 17% rise in Gas Technology orders was more than offset by a 9.5% decline in Oilfield Services & Equipment (OFSE). The decline in OFSE orders accelerated from 24Q4, due to the declines in oil and natural gas prices. Given the uncertainty of the impact of tariffs and its effect on global economic activity, which could slow demand for fossil fuels, management has withdrawn its full year guidance. It did, however, issue guidance for 25Q2 and offered a framework for 2025. It believes that its original IET guidance is achievable, but sees a potential high single-digit decline in total upstream spending, if oil and natural gas prices hold at current levels.
For 25Q2, management sees consolidated revenues of $6.3-$7.0 billion and adjusted EBITDA of $1.04-$1.20. For all of 2025, I now anticipate OFSE EBITDA to fall a little short of the original guidance range, but IET EBITDA to be solidly within it. Overall, my 2025 projections now show total revenue of $27.8 billion, GAAP EPS of $2.48 (down from $2.67 previously) and non-GAAP EPS of $2.57 (down from $2.63). For 2026, I project revenues of $29.3 billion, up 5.6%, GAAP EPS of $2.90 and non-GAAP EPS of $2.87. The 2026 earnings estimates are essentially unchanged from my previous report. My projections implicitly assume that oil and natural gas prices will rebound to levels that were in place before the tariff talk. (Low $70s for oil; perhaps $4.00 for natural gas.)
Since my last report on Feb. 17, BKR’s stock has fallen 21.6%, worse than the S&P 500’s 10.3% slide, but in line with the OSX’s 22.8% decline. At the current price of $36.38, BKR is valued at 14.6 times projected 2025 GAAP EPS and 14.2 times 2025 non-GAAP EPS. Its valuation premium vs. peers (HAL, NOV and SLB), which trade at 9.3 times projected 2025 non-GAAP EPS, has narrowed some. Based upon 25Q1 results, the withdrawn guidance and the drops in its share price and forward multiple, I have lowered my price target from $49 to $44. The new price target equates to a forward P/E multiple of 15 times projected 2026 earnings. Along with its 2.5% dividend yield, the potential total return is now 23.6%. Thus, I am raising my performance rating from “3” (Neutral) to “1” (Buy).
This is a summary of Lark Research’s recent report on Baker Hughes Company (BKR). To obtain a copy of the report, please reach out to Steve Percoco using the contact information provided below.
June 20, 2025 (Report published on April 24, 2025.)
Stephen P. Percoco
Lark Research
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© 2015-2025 by Stephen P. Percoco, Lark Research. All rights reserved.
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