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The Dirt on the Permian Basin: Hot or Not?

PART:
1 2 3 4 5 6 7 8 9 10 11 12 13
Part 13
The Dirt on the Permian Basin: Hot or Not? PART 13 OF 13

Understanding the Analysts’ Targets for Key Permian Oil and Gas Stocks

Analyst recommendations

Finally, we’ll look at the Wall Street analysts’ targets for Apache (APA), Occidental Petroleum (OXY), Concho Resources (CXO), and Pioneer Natural Resources (PXD). These stocks have a majority of their operations in the Permian Basin.

Understanding the Analysts’ Targets for Key Permian Oil and Gas Stocks

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Consensus recommendations

Concho Resources and Pioneer Natural Resources have the most “buy” (including “buy” and “strong buy”) recommendations as compared to peers at 82% and 93%, respectively.

Apache and OXY have the most “hold” recommendations at 60% and 69%, respectively. Apache’s average 12-month target price of $58.66 implies a return of 27.3% over the next 12 months. CXO’s average 12-month target price of $157.16 implies positive returns of ~35% over the next 12 months.

The average 12-month target price of $71.16 for OXY implies a return of 18% over the next 12 months. PXD’s 12-month average target of $224.90 implies a return of 44%—the largest in our group.

CXO and PXD are thus expected to deliver the highest returns over the next 12 months.

Recent upgrades

OXY and PXD were recently upgraded by analyst firms. Credit Suisse upgraded its ratings for OXY from “neutral” to “outperform” on March 14, 2017. J.P. Morgan upgraded its rating for OXY from “underweight” to “neutral” on May 10, 2017. Société Générale updated its ratings for PXD from “hold” to “buy” on February 8, 2017.

Recent downgrades

Apache was downgraded by Barclays from “equal-weight” to “underweight” on March 2, 2017. Seaport Global Securities downgraded PXD from “buy” to “neutral” on March 31. More recently, it downgraded CXO from “buy” to “neutral” on June 21.

The above companies make up 8% of the SPDR S&P Oil & Gas Exploration & Production ETF (XOP).

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