Baker Hughes’ Long-Run Prospects Remain Strong Despite Slowed Customer Activity in Near Term

Baker Hughes posted solid third-quarter results, with revenue increasing 5% year over year and 6% sequentially. The firmwide operating margin was 11% as strong performance from the oilfield services and turbomachinery & process solutions segments offset weak performance from the oilfield equipment segment. Despite the solid results, we’re slightly lowering our fair value estimate to $34 per share from $35 as near-term headwinds from global economic challenges weigh on customer activity over the next few quarters. We’re still optimistic about the firm’s long-term prospects due to strong demand for oil and gas production and additional natural gas refinery capacity that will keep demand elevated through 2026. Our no-moat, stable moat trend, and High Morningstar Uncertainty ratings are unchanged following results.