Although the Trump rally has pushed the broad markets higher, the oil and gas industry has lagged the markets in this time. Over the past week, we’ve seen crude oil prices recover and act as a rising tide for the industry. The question remains whether this price level will stick or even push higher. In fact, a few analysts think they have the answer, based on a few prevailing tailwinds, to where oil and gas companies stand to run from here.
One of the main tailwinds we saw this week in the energy sector was crude oil rising above the $50 a barrel mark on Thursday and closing above it on Friday as well. This was once thought as a strong support level, but it faltered in early March. With oil prices reaching this level again, investors have regained confidence and oil stocks could actually push higher this year.
While the pressure has remained on oil prices, there are indications that lags in data, combined with the OPEC production cuts continuing, that may bode well for the second half of 2017. As expected, many non-OPEC members are suspected of not complying fully with the cuts, but big drops in the output of the Saudis and other OPEC countries should start to show up in the data.
24/7 Wall St. reviews multiple analyst research reports each day of the week, which totals hundreds of analyst calls reviewed each week. In this case we have picked out some of the best ideas from analysts on the energy sector.
A recent Deutsche Bank research report makes the case that non-U.S. and non-OPEC production often surprises to the downside, and the analyst suspects that given the huge spending cuts, a few of the major producing countries can lift production.
At the same time, Jefferies is getting more bullish on the energy sector, with an oil official price forecast that is higher from here. The firm said the group looks very cheap (price to book) and revisions are heading higher.
ConocoPhillips (NYSE: COP) was up big on news of a key asset sale leading to higher buybacks and cutting down its debt. ConocoPhillips was raised to Buy and the price target was raised to $55 from $51 at UBS. It has a 52-week trading range of $38.19 to $53.17 and a consensus analyst price target of $57.70. The big news from the sale this week had shares indicated up almost 8% at $49.60 on Thursday. Shares closed the week out at $49.87.
EOG Resources Inc. (NYSE: EOG) was raised to Buy from Neutral at UBS, which also raised the price target to $109 from $105. Shares of EOG closed Friday at $97.55, with a consensus analyst price target of $114.37 and a 52-week trading range of $69.66 to $109.37.
Nabors Industries Ltd. (NYSE: NBR) was given serious upside in a Deutsche Bank sector call this week for better energy prices ahead. Deutsche Bank has a $20 price target, and the consensus price target is $19.24. Nabors shares had traded at $12.49 before we featured this sector upside call, and it was trading above $13 on Friday’s close.
NRG Energy Inc. (NYSE: NRG) was raised to Buy from Neutral with a $26 price target (versus an $18.11 close) at Goldman Sachs on March 29. NRG has been among the top stocks in the S&P 500 in 2017, in part on takeover hopes driving interest here. It has a 52-week range of $9.84 to $18.56 and a consensus analyst target of $20.36. The shares closed up nearly 2% at $18.70 on Friday.
Range Resources Corp. (NYSE: RRC) was raised to Buy from Neutral at UBS on March 30. Shares closed at $29.10 on Friday. Range Resources has a 52-week range of $26.61 to $46.96 and a consensus analyst target of $43.42.
Weatherford International PLC (NYSE: WFT) was raised to Outperform from Market Perform at Wells Fargo on March 27, a call that was covered in much more detail on the heels of great news driving shares higher. Shares closed at $6.65 on Friday. Weatherford International has a 52-week range of $3.73 to $8.49 and a consensus price target of $7.46.