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Wolfe Research Initiates Bullish Coverage on SLB, Baker Hughes, Citing International Strength
Wolfe Research initiated coverage on three major oilfield services companies on Wednesday, expressing a preference for firms with strong international operations. The research firm assigned Outperform ratings to SLB and Baker Hughes, while rating Halliburton as Peer Perform, citing what it calls "a selective capital cycle favoring international exposure."
SLB received an Outperform rating with a $62 price target. Wolfe Research described the company as "best positioned" for the current cycle, pointing to potential margin growth from the integration of ChampionX. The firm also highlighted growth in SLB's digital and data center businesses and noted that its valuation appears discounted compared to its peers.
Baker Hughes (BKR) received the most bullish outlook, with an Outperform rating and a $70 price target. According to Wolfe, the market is mispricing the company's free cash flow potential, particularly as its Industrial and Energy Technology division is expected to contribute over half of its EBITDA. The pending acquisition of Chart Industries was identified as a key catalyst that could accelerate revenue diversification.
AdIn contrast, Halliburton (HAL) was given a Peer Perform rating. The firm's analysis suggests that Halliburton's performance is "largely macro dependent." With the largest exposure to the North American market among its large-cap peers, its free cash flow growth is considered to be closely tied to domestic activity, which has yet to see a significant upswing.