Shares climbed 4.8 percent to $43.04 at the close in New York. Houston-based Baker Hughes, the worst performer in the Philadelphia Stock Exchange Oil Service Index (OSX), has fallen 12 percent this year.
First quarter per-share earnings of 86 cents was 6 cents higher than the average of 29 analyst estimates compiled by Bloomberg. Revenue climbed 18 percent to $5.4 billion, according to a statement today. Baker Hughes has been working on reducing costs and improving utilization in its hydraulic-fracturing business in North America after customers shifted from natural- gas basins to oil fields.
“The results were better than expected,” Scott Gruber, an analyst at Sanford C. Bernstein & Co. in New York, said today in a telephone interview. “The worst is behind the company from a quarterly profitability standpoint and directionally things will get better.” He rates the shares an “outperform,” which means investors should buy the stock.
Baker Hughes cut its forecast for capital spending this year to a range of $2.7 billion to $2.9 billion from $3.1 billion to $3.4 billion as it reduces the amount it will spend on new fracking equipment, Chief Financial Officer Peter Ragauss said on a conference call today.
The company reported $2.9 billion in first-quarter sales in North America, 5 percent better than Gruber expected. The company’s operating margin there of 14 percent was also slightly better than he expected, according to a note to investors.
The company expects to see “significant” benefits from supply-chain improvements in the second half, Chief Executive Officer Martin Craighead said in the statement.
Schlumberger Ltd. (SLB), the world’s largest oilfield-services provider, reported earnings per-share April 20 that beat analysts’ estimates by 1 cent. Halliburton Co. (HAL), the world’s second-largest services provider, beat analysts’ estimates by 4 cents on April 18.
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