Analyst Action: These Resource Stocks Are On Watch!
It’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…
Whiting Petroleum (WLL)- The Bakken and Permian producer had their price target raised to $120 at Howard Weil. With shares crossing the tape at $86 this morning, the new target represents 40% upside potential.
Range Resources (RRC)- After plummeting to $75 in recent trading, this natural gas producer’s “Buy” rating was reiterated at Canaccord Genuity. The firm sees shares trading at $98, which is a 30% premium to current prices.
SM Energy (SM)- This mid-cap energy producer, with operations in the Bakken, Eagle Ford, Permian, and Mid-Continent region, was upgraded to “outperform” at Howard Weil. Analysts see the company’s shares trading at $109- a 40% premium to current prices.
PDC Energy (PDCE)- Analysts at RBC Capital reiterated their “outperform” rating and $70 price target on the Appalachian Basin producer. PDCE is expected to report quarterly earnings on August 8th.
Encana (ECA)- This Canadian producer was initiated with a “Top Pick” rating by FirstEnergy Capital. Analysts see ECA jumping to $29, which is a 38% premium to current prices.
Anadarko Petroleum (APC)- Goldman Sachs raised their price target on this large-cap international producer to $124. With shares trading at $108, this represents 15% profit potential.
Petroleo Brasileiro (PBR)- The Brazilian oil producer’s price target was moved from “equal weight” to “overweight” at Barclays early last week. Later in the week, Barclay’s analysts upped their price target to $23- a 43% premium to current prices.
And last, but certainly not least…
Noble Energy (NBL)- JP Morgan Chase reiterated their “overweight” rating and $92 price target on this international oil and gas producer. NBL’s shares have recently slumped to $66 on heavy selling due to lowered Q3 production expectations. Clearly, JP Morgan sees the downturn as a buying opportunity!
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.
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Until Next Time,
Justin Bennett
Category: Commodity Trading
