West Texas Intermediate (WTI) crude may have gone out just above $44.00 on Friday, but that was down from almost $46.50 per barrel the prior week. Investors have been trying to nibble into and find value in the oil patch. So far this has come with some small gains here and there, but it has come with a lot of pain for the long-term energy bulls. Still, many investors are wondering if oil is starting to stabilize in that $45-ish per barrel range.
24/7 Wall St. would remind readers that the market, rather than pundit predictions and emotions, will determine the price of oil ahead. That being said, there were several key very positive analyst calls in the oil and gas giants this past week. There were three key upgrades from Evercore ISI in shares of BP, Chevron and Exxon Mobil, and two other key calls were seen elsewhere.
If there is one theme that seems to be prevalent among energy investors now, it is that size matters and quality rules. Most investors seem to believe that the larger oil and gas outfits almost certainly will be able to outlast the smaller and less experienced second-tier and third-tier oil and gas outfits. As a result, 24/7 Wall St. is focused more on the large-cap and mid-cap opportunities rather than the speculative small cap stocks that may not have the fortitude to survive oil under $50 per barrel (or even $75 for that matter).
What investors need to consider here though is that these oil and gas giants are still dependent on energy price trends. They just are no longer all that profitable at current prices, they have been slow to cut on capital spending and some of the largest players could ultimately come with dividend risk.
All said and done, 24/7 Wall St. tracked five key analyst calls that stood out handily above the rest in the oil patch with Buy or Outperform ratings. These analyst calls should not in any way be considered short-term opportunistic swing trades — if oil tanks, so will they. Outside of the Big 3, calls were made in Gulfport Energy and Range Resources, and we have provided some basic information around grouped calls made this week by major firms as well.
Exxon Mobil Corp. (NYSE: XOM) was raised to Buy from Hold with a $95 price target. Exxon Mobil was trading at $85.28 at the prior close, and shares were down 0.4% at $84.47 on Friday’s close. Exxon Mobil has a consensus analyst price target of $83.35 and a 52-week trading range of $66.55 to $97.20.