Analyst Action: These Resource Stocks Are On Watch!

| October 27, 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… 

Diamond Offshore (DO)-  Deutsche Bank reiterated their “sell” rating on shares of this offshore drilling contractor.  Analysts see DO dropping to $31, which is 22% lower than current prices.

EOG Resources (EOG)-  After plummeting into the low $80 range in recent trading, the shares of this international oil and gas explorer were upgraded to “buy” with a $111 price target at Guggenheim.  Wunderlich and Susquehanna also came out with positive ratings on EOG last week.

Price targets range from $110 to $113, which is at least 20% higher than current prices.

Contango Oil and Gas (MCF)-  Analysts at RBC Capital initiated coverage on this Gulf of Mexico explorer with an “outperform” rating and $43 price target.  With shares crossing the tape at $34, RBC’s target represents 26% upside profit potential.

Cimarex Energy (XEC)-  The Permian and Mid-Continent producer had their “buy” rating reiterated at Wunderlich.  Analysts have a $141 price target on XEC, which is a 30% premium to current prices.

Bonanza Creek Energy (BCEI)-  After succumbing to heavy selling in early October on broad oil and gas industry weakness, shares of this Wattenberg producer were reiterated with a “buy” rating at Wunderlich.  Analysts have a $53 price target on BCEI, which is a 26% premium to current prices.

Baker Hughes (BHI)-  The international oil services heavyweight had their shares reiterated as a “buy” at Citigroup and Deutsche Bank.  Analysts have price targets of $71 and $72, which is at least 34% higher than current prices.

And last, but certainly not least…

Gastar Expolation (GST)-  The Hunton Limestone and Marcellus producer had their “buy” rating reiterated at Wunderlich.  Analysts have a $9 price target on GST, which is a 125% 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.

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