This article was originally published by Seeking Alpha on May 9, 2014
By Sarfaraz A. Khan. Research Asst. Gohar Yousuf
By Sarfaraz A. Khan. Research Asst. Gohar Yousuf
Summary
Baker Hughes could deliver serious revenue
and income growth in the coming years.
The company is targeting efficiency
through partnerships.
Oil majors, on the other hand, are
keeping a lid on their budgets.
Argus
Research has recently increased
the price target on Baker Hughes (BHI) to $80 from $68 on
the back of the expected uptake in the North American market. Meanwhile, Baker
Hughes might continue showing strong double-digit growth in the emerging
markets, particularly in the Middle East. The business is also eyeing
efficiency by partnering with other players in the industry.
By 2016,
analysts believe that Baker Hughes could increase its revenues and earnings to
$28.23 billion and $6.23 per share, as per data compiled by Thomson Reuters.
This would show a 26.3% increase in revenues and 152% increase in earnings from
2013.
The growth,
however, is not going to be easy as the leading oil majors are cutting their
budgets.
Robust
Growth In Emerging Markets
The
state-owned energy companies located in the emerging markets, such as PEMEX and
Saudi Aramco, will continue to spend billions to develop their resources.
According to a report by Barclays, the Middle East market in particular could
witness a 14% increase in exploration and production expenditure,
which is in stark contrast to what is happening in North America (discussed
later in the article).
The
international markets focused Schlumberger (SLB), which gets most
of its revenues from outside of North America and nearly 70% from the
state-owned oil giants, could be … read full article at Seeking Alpha.