The week of October 21 had quite a few developments in the market and in the oil patch, with West Texas Intermediate crude managing to close at $50.85. That is the third week in a row with crude oil ending above $50, and with rig counts still rising, maybe it is no surprise that Federal Reserve survey showed more positive views by energy executives.
Investors are continuing to look for opportunities in the oil and gas sector. It is important to understand that many of these oil stocks have recovered handily from their lows. Some of these companies remain under extreme duress, while others are as much as 100% to 200% off of their panic-induced bottoms seen in late 2015 or early 2016.
The week of October 21 brought several key analyst calls looking for handy upside in the oil and gas sector. 24/7 Wall St. tracks many of the analyst upgrades and downgrades to find new ideas each day and week, but keep in mind that there is no such thing as a free lunch in investing.
Other positive issues have been seen in oil and gas, with rig counts now up 16 for the past 17 weeks. Banks are reporting that their exposure to risk for energy defaults has largely subsided. Even the credit ratings agencies have suggested that the worst of the bankruptcies are likely behind.
Here are eight very positive analyst calls in the oil and gas sector for the week of October 21. Again, analysts are not always right and sometimes they just make the wrong assumptions.
Continental Resources Inc. (NYSE: CLR) was raised to Overweight from Equal Weight with a $60 price target at Barclays on October 17. The prior closing price was $51.78, and Harold Hamm’s company ended the week at $52.85. The stock has a 52-week trading range of $13.94 to $55.07 and a consensus analyst price target of $56.22.
Halliburton Co. (NYSE: HAL) was also chased up after earnings by analysts. Halliburton saw price target or ratings changes from the likes of Barclays, BMO, JPMorgan, Goldman Sachs, Nomura and others (see full coverage). Halliburton now has a consensus price target up at $55.17, almost $4 higher than a month ago. Shares closed out the week at $48.43, in a 52-week range of $27.64 to $50.23.
Kinder Morgan Inc. (NYSE: KMI) had a solid week after earnings indicated a higher dividend is likely to return in 2017. It received multiple analyst upgrades, with ratings upgrades from the likes of Stifel, Wolfe Research and Credit Suisse. It also received price target boosts from at least five other firms over the course of the week. Merrill Lynch raised its rating to Outperform from Neutral and raised its target to $25 in a re-upgrade (see full coverage). Shares ended the week at $21.11. The consensus price target is now up about a dollar from a month ago to $24.26. The 52-week range is $11.20 to $28.54.
RSP Permian Inc. (NYSE: RSPP) already had made news this month by paying $2.4 billion to acquire Silver Hill, and it raised cash to pay for the deal. If the analysts on Wall Street are remotely close to accurate, this may be one of the Permian Basin’s cheapest oil stocks. On October 17 we saw many analysts defend the deal and raise targets (see full coverage). After closing at $41.03, this ended up down over 2% on the week, but still standing strong. RSP Permian now has a 52-week range of $16.74 to $43.30, and its consensus price target of $49.10 is up almost $5 from a month ago and up almost $10 from 90 days ago.
Tenaris S.A. (NYSE: TS) was raised to Overweight from Neutral with a price target of $33 at Piper Jaffray on October 18. It had previously closed at $28.80, and the price on Friday’s close was $28.99. This may not be your typical oil company, based on prices, but it is into steel pipe products and other related services for the oil and gas industry. It also hit a 52-week high this week.
Western Refining Inc. (NYSE: WNR) was raised to Buy from Neutral at Citigroup on October 19. The stock closed at $28.07 ahead of the call but went out on Friday at $30.61. The 52-week range is $18.14 to $47.55, and the consensus price target is $27.73.
Gulfport Energy Corp. (NASDAQ: GPOR) was raised to Buy from Neutral with a $35 price target (versus a $27.61 prior close) at Goldman Sachs on October 18. Shares closed down 2.5% at $26.51 on Friday, and that was down from closer to $30.00 at the start of the week. Still, the consensus price target of $35.18 implies handy upside.
Oasis Petroleum Inc. (NYSE: OAS) was raised to Overweight from Neutral with a $16 price target at Piper Jaffray on October 19. The prior closing price was $10.57, but even with a 1.5% drop on Friday, it closed out the week at $11.42. For an opposite view: Goldman Sachs downgraded Oasis to Sell from Neutral with an $8.50 target just a day earlier.
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Last weekend’s oil and gas research review showed 13 oil and gas stocks that analysts are telling their clients to buy.