WPX is ~83% higher than its 52-week low
WPX Energy (WPX), an exploration and production company focused on the Permian Basin and Williston Basin, has fallen 7.6% recently, while the SPDR S&P Oil & Gas Exploration & Production ETF (XOP) has fallen 4.9%. Overall, WPX is ~83% higher than its 52-week low, driven by strong production growth and stable average realized sale prices.
According to WPX CEO Rick Muncrief, “We’re reaping some of the best basis differentials in the Permian Basin among our peers. We expect this to continue over the next couple of years, which is an outcome of our pro-active midstream and marketing strategy.”
What lies ahead?
WPX could rise if crude oil prices fall, given its high valuation and weak financial position. WPX’s price-to-CFFO[1.cash flow from operations] ratio was 7.3x on October 12, higher than the industry median of 5.1x. The company’s CFFO is expected to grow ~89% and ~61% in 2018 and 2019, respectively, while the industry’s median growth is expected to be 60% and 31%.
Of the analysts covering WPX Energy, 96.6% recommend “buy,” and 3.4% recommend “hold.” Goldman Sachs last downgraded WPX, to “neutral.”[2.equivalent to “hold”] Analysts’ average target price of $26.30 for WPX implies a ~41% upside to its current price of $20.