Baker Hughes Incorporated (NYSE:BHI) — Baker Hughes is one of the world’s largest oilfield supply companies and, like most companies associated with crude oil, it suffered a loss last year. However, with crude oil projected by a unit of Standard & Poor’s to average in the area of $53 per barrel in 2017, the deal to merge with the oil and gas business of General Electric Company (NYSE:GE) to create a new oil services firm could be a very profitable venture for Baker Hughes.
S&P sees “few antitrust issues, unlike the failed deal with Halliburton Company (NYSE:HAL).” Thus, S&P has upgraded their opinion on the shares of BHI stock from a “Four-Star Buy” to a “Five-Star Strong Buy.” They kept their 2017 and 2018 EPS estimates at 47 cents and $1.90, respectively, and their 12-month target at $70.
S&P analysts are of the opinion that oil services are in the early phase of a recovery.
I last reported on Baker Hughes on Oct. 27, when I placed the stock on my “Buy List” with the suggestion to buy the stock at $53 with a trading target of $60. In December the stock hit a high of $68.59. But that was a top, and in late-January it reversed through its 50-day moving average.
The 50-day SMA became a line of resistance to rallies until early in April when buying drove the stock to over $62. Since then, it has issued two of my proprietary CBR Buy signals, the last occurring last Tuesday when it reversed through the bearish resistance line at $58.
On Friday BHI’s intraday high at $60.10 pierced the 50-day SMA at $59.55. The recent pattern is bullish and thus try to buy BHI stock at $59 for a trading objective of $68 within four months. If successful the projected return would be about 15%.
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