Baker Hughes (BKR) stock closed at $22.09 yesterday, up 2.7% year-to-date. This year, the S&P 500 (SPY) has gained 23.3%, while the VanEck Vectors Oil Services ETF (OIH) has fallen 15.5%. BKR is OIH’s third-largest holding.
What might have caused the downturn?
Bearishness toward energy commodities has impacted the energy sector and may be limiting BKR stock. This year, the Energy Select Sector SPDR ETF (XLE) has risen 4.7%, the least among SPDR ETFs. Subdued energy commodity prices have impacted drilling activity. Last week (ended November 8), the oil and natural gas rig counts stood at 684 and 130, respectively. The oil rig count was at its lowest since April 14, 2017, while the natural gas rig count was almost at a three-year low.
BKR’s earnings result
On October 30, BKR reported its Q3 earnings results. In the quarter, its adjusted EPS rose 5.3% sequentially and 10.5% year-over-year to $0.21, missing analysts’ mean estimate by 12.2%. BKR stock fell 1.3% after the earnings release.
Of the 25 analysts covering BKR, 80% suggest “buy” or “strong buy,” and 20% suggest “hold.” Their mean target price suggests a 28.6% upside based on BKR’s closing price yesterday.
Baker Hughes’ moving averages
Baker Hughes stock closed 0.3%, 2.4%, 4.5%, and 8.2% below its 20-, 50-, 100-, and 200-day moving averages yesterday, respectively, a bearish sign. This week, BKR’s 20-day moving average of $22.16 may be a resistance zone for the stock. Yesterday, OIH closed just 1.3% above its 20-day moving average. Baker Hughes’ implied volatility of 34.3% yesterday suggests the stock could close between $21.20 and $22.98 in the next five trading sessions.
BKR’s short interest-to-equity float ratio was 1.52% yesterday. After the company’s October 20 earnings release, this figure fell to 1.33%, the lowest since May. The company’s marginal EPS growth may have impacted its stock’s short interest.
BKR’s institutional holdings
Capital Research and Management is BKR’s largest institutional investor, with a 9.5% stake. In the third quarter, BlackRock Fund Advisors added 6.4 million BKR shares, increasing its stake to 4.9%. BlackRock Fund is the stock’s fourth-largest institutional holder. Meanwhile, Pzena Investment Management added around 3.03 million BKR shares in the quarter. BKR now constitutes 1.2% of Pzena’s portfolio.