Baker Hughes Co. (BKR): See Long-Term Growth Driven by Diversified OFSE Exposure and Increasing IET Order Growth

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Baker Hughes Co. (BKR): See Long-Term Growth Driven by Diversified OFSE Exposure and Increasing IET Order Growth

Goldman Sachs Baker Hughes Co. (BKR)

Key Takeaways from the 2Q26 Call

See strong end-markets in IET and order expansion driving out-year growth. As BKR

continues to see out-sized demand across IET’s end-markets, the company continues to

look to expand manufacturing and equipment capacity to meet customer needs for

power and LNG equipment. The company raised FY26 IET order guide to ~$18.5 bil at

the mid-point to reflect increasing orders on the power systems side of the business, as

well as gas processing and production infrastructure. With the company doubling gas

turbine capacity from 2026 levels by the end of 2028, we estimate continued growth

within BKR’s IET segment, particularly as power demand and Behind-the-Meter remains

in-focus on the gas turbine side of the business, as we anticipate the additional capacity

to convert to revenue largely beginning in 2028, driving growth over the next several

years. With BKR’s continued growth in IET and increase in FY26 order outlook, we

estimate the company to achieve ~$2.74 bil of EBITDA in FY26, with EBITDA margins

approaching 25% in the segment by 2031, as we account for conversion of increased gas

turbine capacity revenue realization towards the end of 2027 and into 2028.

See modest impact from continued Middle East disruption in OFSE in 2H26, focus on

out-year growth. BKR noted their expectation for disruptions from the Middle East to

remain modest through the back half of the year, after OFSE delivered stronger results

than anticipated in 2Q, despite the ongoing conflict in the region. We see BKR’s

diversified exposure to global regions such as Latin America, Sub-Saharan Africa, and