Jefferies has raised its price target for oil rig leasing giant Baker Hughes Incorporation (NYSE:BHI).
It said the firm’s plans are now taking shape and it feels “somewhat more comfortable” with the apparent strategy shift on distribution channels given its relatively small scope.
That being said, the broker still sees Baker Hughes (BHI) growing less than its sector peers for the foreseeable future, and it retains concerns that the market is overoptimistic in terms of cost savings that will be achieved in 2017.
The price target is lifted from US$41 to US$44, which is still a couple of bucks below the current share price, thus explaining the decision to stick with the ‘hold’ recommendation.
“BHI noted that its exit plan addresses 5% of current revenues (and we understand that it targets specific product lines in any given country and not any incremental countries as a whole). The company's current effort to vet alternative selling channels - local oilfield service companies - focuses on addressing this 5% that it is leaving behind, although success over the long term implies growth well beyond replacing that level of revenue,” said Brad Handler at Jefferies.
“With respect to the US, we understand that some of the recent impairments include pressure pumping assets, although we believe as there is greater definition of this business plan, there is room for further divestitures (presumably including of infrastructure other than frac trucks),” he added.
The broker has turned more pessimistic on losses per share for the full year, which it now thinks will come in at US$1.85 versus its previous forecast of a loss per share of US$1.75.
The second quarter update from drugs firm Bristol-Myers Squibb Co (NYSE:BMY) beat market expectations on both the top and bottom lines, while the company also raised earnings per share (EPS) guidance for the full year, yet the shares still fell back in a flat market.
Goldman Sachs thinks the under-performance can be partly attributed to the impact of inventory movements on US sales for new products like Opdivo and Eliquis.
“However, we note that underlying volume growth for both products were [sic] strong,” the investment bank said.
Goldman Sachs has tweaked its model and increased its revenue estimates by 1%-2% and its EPS numbers by %-3%, driven by higher sales expectations for Orencia, Eliquis and Opdivo OUS, though partly offset by higher research & development costs.
Its EPS for the current year moves up to US$2.65, which is at the high end of guidance.
It has a 12-month price target of US$90 and rates the shares a ‘buy’.
Around the brokers
Robert W. Baird: upgrades hard disk maker Western Digital Corp (NASDAQ:WDC) to ‘outperform’ from ‘neutral’.
Maxim Group: downgrades online food ordering platform GrubHub Inc (NYSE:GRUB) to ‘hold’ from ‘buy’.
Monness, Crespi & Hardt: downgrades GrubHub to ‘neutral’ from ‘buy’.
RBC Capital Markets: upgrades speciality vehicles maker Oshkosh Corp (NYSE:OSK) to ‘outperform’ from ‘sector perform’; motorcycle maker Harley Davidson Inc (NYSE:HOG) goes the other way while software firm NetSuite Inc (NYSE:N) is downgraded to ‘sector perform’ from ‘outperform’ after accepting a bid from Oracle Corporation (NYSE:ORCL) (as exclusively reported last week by Proactive Investors).
Stifel: upgrades foods group Pinnacle Foods Inc (NYSE:PF) to ‘buy’ from ‘hold’