Based on Reuters data from 36 analysts tracking Pioneer Natural Resources (PXD), 95% recommended a “buy,” while 5% recommended a “hold.” None of the analysts recommended a “sell.” On February 13, Pioneer Natural Resources reported an adjusted net income of $1.18 per diluted share for the last quarter—a fall of 43% on a sequential basis.
After Pioneer Natural Resources’ earnings release on February 15, Jefferies and SunTrust Robinson reduced the target price on the stock by $7 and $15 to $227 and $185, respectively. On the same day, Morgan Stanley (MS) reduced its target price on Pioneer Natural Resources by $11 to $174. However, Imperial Capital increased its target price on the stock by $1 to $199. On February 15, Pioneer Natural Resources closed at $145.35.
Analysts reviewed the target price
In the last quarter, Pioneer Natural Resources’ earnings missed analysts’ consensus estimates by more than 16%. The gloomy outlook for natural gas prices could have impacted analysts’ view on the stock. Pioneer Natural Resources operates with a production mix of 18.3% in natural gas.
In the last quarter, Pioneer Natural Resources’ adjusted oil realized prices were higher than Permian oil producers including Concho Resources (CXO) and Cimarex Energy (XEC) due to its firm transportation agreement. Due to a transportation bottleneck and the rapid production growth in the Permian Basin, WTI at Midland—the benchmark for oil produced in this region—usually trades at a discount to WTI at Cushing. On February 15, the WTI Cushing-Midland spread was at -$0.7.
Due to weakening supply outside the US, the demand for sour crude oil has increased. WTI grade oil is sweeter than Brent crude oil. On February 15, the Brent-WTI spread moved above $10. The rising demand for sour crude might impact Pioneer Natural Resources’ oil exports. Any expansion in the Brent-WTI spread is positive for ConocoPhillips (COP).
Mean target price
The mean target price for Pioneer Natural Resources in the next year is $200, which implies a potential upside of ~37.8% from its last closing level. For Concho Resources (CXO) and Apache (APA), the mean target prices suggest potential upsides of 33.7% and 11.8%, respectively. They’re two other Permian Basin oil producers that are part of the S&P 500 Index’s (SPY) holdings in the upstream subsector.