What a week it was for the long-suffering energy investors. As expected, the president reinstated full sanctions on Iran while departing the Iran deal, which many felt was not in the best interest of the United States and its allies. Either way, with the risk premium in the Middle East back on the table, and the worldwide glut of oil almost eliminated, when you add in surging demand you have all the tailwinds needed to push energy stocks higher.
Many of the top brokerage firms and banks that we follow here at 24/7 Wall St. have come out over the past month with increasingly bullish stances on the energy sector, with many of those analysts raising price targets on the stocks rated Buy at their firms.
We screened our recent coverage for the top energy and oilfield services stocks and found eight that Wall Street is very positive on going into the summer.
This top company is still down a stunning 30% from highs printed in 2014, the last time oil traded at $70. Anadarko Petroleum Corp. (NYSE: APC) operates through three segments. The Oil and Gas Exploration and Production segment explores for and produces natural gas, oil, condensate, and natural gas liquids (NGLs). The other segments are Midstream and Marketing.
The company reported impressive first-quarter results, and Merrill Lynch said this when covering the earnings:
Adjusted earnings per share of $0.52 beat consensus of $0.40 on lower DD&A and strong oil production that topped guidance led by the US onshore. Half of Permian production is exposed to basis in 2018, but Enterprise and Cactus 2 should leave the company fully covered by 2019. With oil prices at current levels we believe Anadarko can reload share buybacks after the program concludes by mid year.
Anadarko Petroleum shareholders are paid a 1.48% dividend. Merrill Lynch recently raised its price target to $95 from $87. The Wall Street consensus price objective was last seen at $74.87. The stock closed trading on Friday at $68.31 per share.
This is a top Permian Basin play for more aggressive accounts and is a top pick across Wall Street. Diamondback Energy Inc. (NASDAQ: FANG) is an independent oil and natural gas company headquartered in Midland, Texas, and focused on the acquisition, development, exploration and exploitation of unconventional, onshore oil and natural gas reserves in the Permian Basin in West Texas.
Diamondback’s activities are primarily focused on the horizontal exploitation of multiple intervals within the Wolfcamp, Spraberry, Clearfork and Cline formations.
Wall Street analysts have noted in the past the company’s top-tier asset base, solid accretive additions and financial discipline, which they think allows for not only continued solid cash flow, but could put the company in play as a takeover target. Diamondback continues to drill some of the most economical wells in the United States as efficiencies improve, costs decrease and activity remains in the better regions.
SunTrust has a price target on the stock of $165, while the posted consensus target is $156.67. The shares closed at $123.82 on Friday.