It is no secret that we are in the midst of a raging bull market, and now many investors have started gearing up for another good year for stock investors in 2018. Oil currently remains under $60 per barrel, but Wall Street and oil and gas strategists believe that many of the U.S. oil and gas producers will be quite profitable in 2018 and beyond.
24/7 Wall St. tracks dozens of analyst upgrades and downgrades each morning of the week. This literally includes hundreds of analyst calls over the course of most weeks. With the bull market now nearly nine years old, stocks in general have been the place to be for almost all that time. Where that generality has not held true is in the energy patch. Many oil and gas stocks are down 20%, 30% or even over 50% from their highs in recent years.
Most analyst calls in large cap and mid-cap stocks with new and reiterated Buy or Outperform ratings are predicting total return upside of about 8% at this stage in the bull market. In the oil gas sector, there have been some very bullish analyst calls in recent days. We went back to December 15 to review where the bullish analyst calls are being made in the energy sector.
Consensus analyst target prices have been provided by Thomson Reuters, and we have used historical trading data to offer an implied upside to the targets given in each call.
CNX Resources Corp. (NYSE: CNX), the natural gas play that was under CONSOL (coal), was started as Outperform and assigned a $22 price target at Robert W. Baird on December 19. The shares were up 1.4% at $14.40 after the call, still implying just over 50% upside in the post-spin operation. Its 52-week trading range was shown as $11.29 to $16.47, but that may not be representative of the post-spin effort. Back on December 1, S&P raised its corporate credit rating to BB- from B+ based on exiting the coal overhang.
Continental Resources Inc. (NYSE: CLR) was raised to Outperform from Neutral at Macquarie on December 14, and on December 12 Credit Suisse started it with an Outperform rating and assigned a $57 price target. The 52-week range for the energy giant is $29.08 to $53.57, and shares were recently trading at $48.56. Continental Resources has a consensus analyst target of about $51 now.
Fairmount Santrol Holdings Inc. (NYSE: FMSA) was raised to Buy from Neutral at Guggenheim with a $7.30 price target on December 18. Its shares were at $5.18 ahead of the call, and they recently traded at $5.25. This frac-sand player has a volatile 52-week range of $2.46 to $13.12.
Gulfport Energy Corp. (NASDAQ: GPOR) was raised to Overweight from Neutral at JPMorgan on December 15. The consensus price target was $19.23, and shares have traded in a 52-week range of $10.90 to $23.11. The stock closed at $12.19 ahead of the call, and the stock recently traded at $12.10.
Noble Energy Inc. (NYSE: NBL) was raised to Buy from Hold with a $32 price target at Jefferies on December 20. The shares closed up 3.6% at $27.23 on Tuesday, in a 52-week range of $22.99 to $40.89. This call is actually almost $4 lower than the pre-call consensus price target, but Noble shares were up over 1% at $27.52 afterward.
2018 Outlook: Credit Suisse Sees Big Upside for 5 Top Picks in Exploration & Production
Phillips 66 Partners (NYSE: PSXP) was raised to Buy from Neutral with a $60 price target at Goldman Sachs on December 18. The units were last seen trading at $51.23, and the 5% yield would represent a total return of over 22% if the firm is correct. The 52-week range is $44.40 to $58.00, and the consensus price target is $59.43.
ProPetro Holding Corp. (NYSE: PUMP) was started with a Buy rating and assigned a $27 price target at SunTrust Robinson Humphrey on December 20. This compares with a $19.36 prior closing price, but the shares were up 2.5% at $19.85 after the call. ProPetro has a consensus target price of $21.00 and a 52-week range of $10.84 to $20.46.
RSP Permian Inc. (NYSE: RSPP) was started with an Outperform rating and assigned a $46 price target at Robert W. Baird on December 19. Its shares were trading at $36.91 going into the call. RSP Permian was reiterated as Buy at Stifel and the price target was raised to $46 from $45 on December 19, and it was also issued a new Outperform rating and a $44 target by Credit Suisse back on December 12. Those calls compared to a 52-week range of $28.76 to $46.92 and a consensus target price of $46.03.
Southwest Gas Holdings Inc. (NYSE: SWX) was raised to Buy from Neutral at UBS on December 19, and the price target was raised to $97 from $85, versus a prior closing price of $79.67. That implies upside of almost 24% when you account for the 2.5% dividend yield. That being said, the shares were up 3.8%at $82.75 shortly after the call. The pre-call consensus target was $79.00, and the 52-week range is $71.51 to $86.87.