Analyst Action: These Resource Stocks Are On Watch!

| November 3, 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… 

Continental Resources (CLR)- This top-tier Rocky Mountain oil and gas producer was downgraded to “neutral” from “buy” at Goldman Sachs. What’s more, Goldman reduced their CLR price target from $84 to $63.

Basic Energy Services (BAS)- The small-cap energy services provider was downgraded to “sell” from “buy” at Goldman Sachs. Adding insult to injury, Goldman slashed their BAS’ price target from $33 to $12, which is inline with current prices.

Patterson-UTI Energy (PTEN)- Here’s another oil services provider getting the ax from analysts. Goldman Sachs and Wells Fargo downgraded PTEN to “neutral” from “outperform” last week. Goldman drastically cut their price target on the company from $74 to $26.

Petroleo Brasileiro (PBR)- The Brazilian producer was downgraded from “buy” to “neutral” at Goldman Sachs after leftist Dilma Rousseff was re-elected as Brazilian President.

Whiting Petroleum (WLL)- Barclays reiterated their “overweight” rating on the Bakken producer. However, the firm dropped their price target on WLL from $95 to $85. But that’s still 40% higher than current prices.

Hess (HES)- The international oil and gas producer was upgraded to “sector outperform” at Howard Weil. Analysts have a $105 price target on HES, which is a 20% premium to current prices.

And last, but certainly not least…

Southwestern Energy (SWN)- Analysts at Morgan Stanley and Imperial Capital initiated coverage at “outperform” on this top-tier US natural gas producer. Both firms have a $50 price target on SWN, which is a 50% 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

Tags: , , , , , , , , ,

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.