Analyst Action: These Resource Stocks Are On Watch!

| October 20, 2014 | 0 Comments

Analyst ActionIt’s Monday, and that means it’s time for a look at compelling analyst upgrades and downgrades.

In case you’re unaware, analysts at the biggest banks and investment firms on Wall Street provide research on a multitude of natural resource companies.  It’s not always the case, but most times a notable bullish change in a respected analyst’s outlook can have a significant influence on a company’s share price.

Of course, their ratings changes aren’t always positive…

When an analyst applies a big downgrade, shares can lose ground quickly.

After all, it’s not a great idea to be fully invested in a company that’s falling out of favor with Wall Street.  At the very least, a downgrade can slow buying activity, which opens the door to lower prices.

Either way, it’s important to keep an eye on the analyst activity.  Doing so can give you a substantial leg up on the market.

Here are last week’s natural resource company ratings changes that caught my eye… 

Gulfport Energy (GPOR)-  Analysts at RBC Capital upgraded the multi-basin North American oil and gas producer from “sector perform” to “outperform” with a $62 price target.  With shares crossing at $48 this morning, RBC’s target represent 30% upside.

Halliburton (HAL)-  Analysts at Morgan Stanley upgraded this international oil services provider to “overweight” from “equal weight” with a $60 price target.  What’s more, HAL released better than expected Q3 earnings this morning. 

Occidental Petroleum (OXY)-  Shares of the international oil producer were downgraded from “outperform” to “neutral” at Credit Suisse.  Despite the downgrade, it’s important to note Morgan Stanley and Bank of America still have buy ratings with price targets of $115 and $130 respectively.

Matador Resources (MTDR)- The quickly growing unconventional oil and gas producer had their “outperform” rating and $31 price target reiterated at Northland Capital.   With shares trading at $22 this morning, Northland’s target is a 41% premium to current prices. 

PDCE Energy (PDCE)-  Analysts at Suntrust upgraded the Utica/Marcellus producer from “neutral”  to “buy” with a $57 price target.  With shares crossing the tape at $41 this morning, Suntrust’s target is a 39% premium to current prices.

Viper Energy (VNOM)-  After a brutal bout of selling in recent weeks, analysts at Robert Baird and Northland Securities upgraded VNOM to “outperform”.  The firms have price targets of $32 and $29, which is at least 38% higher than current prices.

And last, but certainly not least…

Southwestern Energy (SWN)-  After buying $5.3 billion worth of Marcellus acreage from Chesapeake (CHK) last week, SWN was upgraded to “buy” with a $49 price target at Bank of America.  That’s a 53% premium to current prices.

There you have it…

What you see above are the most captivating, and potentially profitable, ratings changes I came across over the past few days.  Shares prices may already be reacting to the ratings and price target adjustments.

Now remember…

Just because an analyst has a bullish view on a company doesn’t mean you should dump all your money into the company’s stock.  Do your own due diligence and always use correct position sizing and risk control measures in your trades.

If you’d like me to do the work for you, check out the Options Profit Pipeline.  This one-of-a-kind options service focuses specifically on commodities and the companies producing them.

Until Next Time,

Justin Bennett

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Category: Natural Resource Stocks

About the Author ()

Justin Bennett is the editor of Commodity ETF Alert, an investment advisory focused on profiting from the ebb and flow of important commodities via ETFs. The commodity veteran and options specialist is also a regular contributor to the Dynamic Wealth Report. Every week, Justin shares his thoughts with our readers on a variety of commodity-related topics. Justin is also a frequent contributor to Commodity Trading Research’s free daily e-letter. And he’s the editor of another highly successful and popular investment advisory, the Options Profit Pipeline.