Bakers Hughes Lays Path For Higher Margins

Dahlman Rose has published a research report on Baker Hughes, Inc. BHI after the company reported 3Q earnings that exceeded expectations, a welcome surprise after the company's lacking 2Q. In the report, Dahlman Rose writes "BHI reported 3Q10 EPS of $0.58, vs our estimate of $0.43 and consensus of $0.46. The third quarter was characterized by strong top line growth driven by a pickup in North American and international activity. Higher fixed costs weighed on margins in a number of regions, especially those whose activities were weaker in 3Q10, like Africa and Norway. Despite these headwinds, the company set a road map for cost reductions to address redundancies/inefficiencies, including the elimination of overlapping regional management structures and better control of supply chain costs." Dahlman Rose maintains its Buy rating and $74 price target. Baker Hughes, Inc. closed yesterday at $48.37.