Analyst Action: These Resource Stocks Are On Watch!

| July 28, 2014 | 0 Comments

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…

Matador Resources (MTDR)- This quickly growing oil and gas producer, with operations in the Eagle Ford Shale and Permian Basin, was downgraded from “Buy” to “Hold” at Stifel Nicolaus.  MTDR shares have had a remarkable run over the past year and a half, surging from $8 to $30.  Stifel set a $24 price target on MTDR, which is 14% below current prices.

Halliburton (HAL)- After reporting strong earnings early last week, analysts at Sterne Agee, Susquehanna, Robert Baird, and JP Morgan Chase all raised their price targets on the oil services heavyweight. 

Targets range from $79 up to $91, with the latter being 23% above current prices.

Diamondback Energy (FANG)- Here’s another Permian Basin operator getting a ratings upgrade.  Analysts at Roth Capital upgraded FANG to “Buy” with a $101 price target, which is a 14% premium to current prices.

C&J Energy Services (CJES)- Analysts at Jeffries Group reiterated their “Buy” rating on the small-cap oil services provider with a $40 price target.

Kinder Morgan (KMI)- The large-cap pipeline operator had their price target upped to $40 at RBC Capital.  As you may know, KMI is a Master Limited Partnership (MLP) that currently pays a 4.4% dividend.

Gastar Exploration (GST)- The Marcellus Shale and Hunton Shale operator received a price target increase from Topeka Capital.   The company sees GST trading at $11- a 37% premium to current prices.

Schlumberger Limited (SLB)- After surging from $108 to $118 in the last week of June, SLB has slowly bled back to the $113 area.  Analysts at Cowen, Global Hunter, and Deutsche Bank either reiterated their buy rating or upgraded their price target last week.  All three firms have targets of $126 or higher.

Range Resources (RRC)-  Shares of the top-tier natural gas operator were met with hefty selling the past few weeks as the price of commodity they produce fell to new yearly lows. 

However, analysts at Stephens upgraded the company from “Equal weight” to “Overweight” with a $105 price target last week.  With shares trading at $77, the upgrade represents 36% profit potential.

And last, but certainly not least…

PDC Energy (PDCE)- Here’s another oil and gas producer that has fallen out of bed recently.  PDCE plummeted from $70 down $54 in the past month. 

However, analysts at Howard Weil see the downturn as a buying opportunity.  The firm pushed PDCE shares to an “Sector Outperform” rating this week, with a $86 price target-  a 60% 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. 

Subscribers recently closed out a 130% gain in Petroleo Brasileiro (PBR)!

Until Next Time,

Justin Bennett

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Category: Commodities

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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