Energy Business

Big Changes From BofA on 'Undervalued' Oil Industry: 8 Top Picks and More

California Resources Corp. (NYSE: CRC) was initiated with a Buy rating and a price objective of $64 a share. The estimated share-price upside in 2022 is 47%, and BofA estimates free cash flow yield (before dividends) for the year at 12%. The company’s total return for the past 12 months is about 73%.

Canadian Natural Resources Ltd. (NYSE: CNQ) was initiated at Neutral with a price objective of C$68 (about $53.80). Its estimated share-price upside in 2022 is 17%, and BofA estimates free cash flow yield (before dividends) for the year at 17%. The company’s total return (on Toronto-traded shares) for the past 12 months is almost 80%.

Denbury Inc. (NYSE: DEN) was initiated at Neutral with a price objective of $92. Denbury’s estimated share-price upside in 2022 is 15%, and BofA estimates free cash flow yield (before dividends) for the year at 14%. Its total return for the past 12 months is nearly 177%.

National Fuel Gas Co. (NYSE: NFG) was initiated at Underperform with a price objective of $66. Its estimated share-price upside in 2022 is 3%, and BofA estimates free cash flow yield (before dividends) for the year at 5%. The company’s total return for the past 12 months is 52%.

Devon Energy Inc. (NYSE: DVN) was downgraded from Buy to Neutral, but the price objective raised from $50 to $57. Devon’s estimated share-price upside in 2022 is 18%, and BofA estimates free cash flow yield (before dividends) for the year at 14%. Devon’s total return for the past 12 months is about 176%.


Pioneer Natural Resources Inc. (NYSE: PXD) was downgraded from Buy to Neutral, and the price objective raised from $230 to $234. Pioneer’s estimated share-price upside in 2022 is 18%, and BofA estimates free cash flow yield (before dividends) for the year at 13%. Its total return for the past 12 months is about 56%.

Marathon Oil Corp. (NYSE: MRO) was downgraded from Neutral to Underperform, and the price objective raised from $18 to $19. The estimated share-price upside in 2022 is 5%, and BofA estimates free cash flow yield (before dividends) for the year at 16%. Marathon’s total return for the past 12 months is 138%.

Coterra Energy Inc. (NYSE: CTRA) was downgraded from Neutral to Underperform, and the price target lowered from $26 to $23. Coterra’s estimated share-price upside in 2022 is 12%, and BofA estimates free cash flow yield (before dividends) for the year at 12%. The company’s total return for the past 12 months is almost 33%.

In addition to these new and changed ratings, BofA listed eight oil and gas producers as its top ideas in the energy sector. Suncor was among the eight, with the analysts citing the company’s sector-low break-even price of $35 a barrel and its dividend coverage, “setting the stage for leading cash return growth off an already compelling yield proposition (~5.3% dividend yield).”