Upstream Stocks: Analyzing Rating Updates Last Week

Chesapeake Energy

Chesapeake Energy (CHK) saw a rating downgrade at Suntrust Robinson last week. Suntrust Robinson lowered Chesapeake Energy to “hold” from “buy” and reduced the target price to $5 from $6. Now, 58.3% of the analysts surveyed by Reuters rate Chesapeake Energy as a “hold,” 33.3% rate it as a “sell,” and 8.4% rate it as a “buy.” Currently, Chesapeake Energy is trading above its average target price of $4.5.

Upstream Stocks: Analyzing Rating Updates Last Week

Concho Resources

Concho Resources (CXO) saw two rating updates and two target price revisions last week. Suntrust Robinson raised Concho Resources to “buy” from “hold,” while Piper Jaffray initiated coverage on the company with an “overweight” rating, which is equivalent to “buy.” Piper Jaffray assigned a target price of $193. The two target price updates were:

  • Suntrust Robinson: $170 from $155
  • Morgan Stanley: $163 from $155

Now, 74.2% of the analysts rate Concho Resources as a “buy,” while 25.8% rate it as a “hold.” Concho Resources’ average target price of $181.3 implies ~18% upside potential from the current price levels.

Apart from Concho Resources, Piper Jaffray initiated coverage on three other upstream companies.

  • Devon Energy (DVN): “overweight” rating and a target price of $53
  • Apache (APA): “neutral” rating and a target price of $50
  • Hess (HES): “neutral” rating and a target price of $83

Matador Resources 

Suntrust Robinson downgraded Matador Resources (MTDR) to “hold” from “buy.” Suntrust Robinson also reduced Matador Resources’ target price to $35 from $42. Overall, Matador Resources has seen six rating updates since the beginning of 2018—two downgrades, two upgrades, and two new coverage initiations. Now, 75.0% of the analysts rate Matador Resources as a “buy,” while 25.0% rate it as a “hold.” Matador Resources is trading close to the low range ($33) of its analysts’ target price. The average target price of $40 implies ~21% upside from the current price levels.

Cabot Oil & Gas

Morgan Stanley lowered Cabot Oil & Gas (COG) to “equal-weight,” which is equivalent to “hold” from “overweight,” which is equivalent to “buy.” Morgan Stanley lowered Cabot Oil & Gas’s target price to $23 from $29. Evercore ISI Group upgraded Cabot Oil & Gas to “outperform,” which is equivalent to “buy” from “hold.” Overall, Cabot Oil & Gas has seen six rating updates in the past six months—two downgrades, two upgrades, and two new coverage initiations. Now, 55.2% of the analysts surveyed by Reuters rate Cabot Oil & Gas as a “buy,” 37.9% rate it as a “hold,” and 6.9% rate it as a “sell.” Cabot Oil & Gas’s average target price of $27.5 implies ~23% upside from the current price levels.

WPX Energy

Last week, Jefferies initiated coverage on WPX Energy (WPX) with a “buy” rating. Jefferies assigned WPX Energy a target price of $28—the only rating update for WPX Energy in 2018. Now, 96.6% of the analysts rate WPX Energy as a “buy,” while 3.4% rate it as a “hold.” WPX Energy’s average target price of $24.6 implies ~23% upside from the current price levels.