BKR
Baker Hughes Company
$55.95
Oil & Gas E&P
85%
FCF at Price Deck × Multiple
Moderate
·
Conviction
Overvalued
Trading 28.7% above fair value
You pay
$55.95
Bear
$24.66
Fair
$43.46
Bull
$67.10
Bear
$24.66
-55.9%
FCF $1966M × 10x
Fair
$43.46
-22.3%
FCF $2537M × 13x
Bull
$67.10
+19.9%
FCF $3108M × 16x
Key Value Driver
Oil price assumption ($75/bbl base case)
Implied Market Multiple
22.7x
Summary
Our base-case estimate uses a valuation based on free cash flow under different commodity price assumptions and a valuation multiple. We then blend that result with the average analyst price target of $72.45 from 45 analysts, using a 30% weight on analyst consensus. That produces an estimated intrinsic value of $43.46 per share.
Warnings
Where you think oil prices will settle long-term drives over 80% of this valuation. The biggest risk isn't the company itself — it's getting the commodity price wrong.
Wall Street's average price target is $72.45 (from 45 analysts). Our estimate is 57% below the consensus -- consider that gap carefully.
Key Risks
- Growth DCF inappropriate — commodity volumes do not compound
- Geopolitical premiums are real but historically temporary
- Reserve replacement ratio below 100% for 3 years is existential