Oil has been at the forefront of discussion in terms of geopolitics since Russia invaded Ukraine in February. There are more questions arising by the day both domestically and internationally about what further oil supply-chain problems will look like.
Europe has been depending on Russia for its fossil-fuel energy needs and this makes the continent vulnerable to Moscow as the winter months approach. While heat waves are roasting Europe currently, energy consumption actually picks up in the winter and it will most likely will create more problems.
Turning to the domestic front, one major Wall Street firm issued a few calls on where it thinks these stocks could go from here. BofA has issued calls with a focus on oil and gas stocks. A majority of the calls are very positive, forecasting massive upside in both the near and long term. However, there are a few losers in the group that lead analyst Doug Leggate is saying to avoid.
Leggate continues to see grounds to be defensively positioned in U.S. oil, but after a market correction that has seen the broader sector move 20% lower, multiple stocks screen with upside at BofA’s $70 long-term base case for a barrel of oil.
It is important to remember that no single analyst report should be used as a sole basis for any buying or selling decision.
Ovintiv Inc. (NYSE: OVV): BofA upgraded to a Buy rating from Neutral but cut the price target to $60 from $65, implying upside of 38% from the most recent closing price of $43.44. The stock traded around $49 on Thursday, in a 52-week range of $21.92 to $63.30. Shares are up over 44.5% year to date. It has a dividend yield of 2.2%.
ConocoPhillips (NYSE: COP): BofA upgraded to a Buy rating from Neutral and lowered the price target to $134 from $135, implying upside of 57% from the most recent closing price of $85.07. The stock has a 52-week trading range of $51.41 to $124.08, and it traded near $95 a share on Thursday. The stock is up 31% year to date. It has a dividend yield of 2.1%.
EOG Resources, Inc. (NYSE: EOG): Leggate upgraded to a Buy rating from Neutral but cut the price target to $119 from $146, implying upside of 20% from the most recent closing price of $99.53. The stock traded around $109 on Thursday, in a 52-week range of $62.81 to $147.99. Shares are up over 24.5% year to date. It has a dividend yield of 2.9%.
California Resources Corp. (NYSE: CRC): BofA downgraded to an Underperform rating from Buy and slashed the price target to $49 from $74, implying upside of 16% from the most recent closing price of $42.26. This company was moved to Underperform in favor of greater exposure to natural gas, according to Leggate. The stock traded around $43 on Thursday, in a 52-week range of $26.39 to $50.44. Shares are down over 1% year to date. It has a dividend yield of 1.6%.
Denbury Inc. (NYSE: DEN): Leggate downgraded to an Underperform rating from Neutral and cut the price target to $71 from $107, implying upside of 18% from the most recent closing price of $59.89. Leggate noted that Denbury also was downgraded in favor of greater exposure to natural gas. The stock traded around $62 on Thursday, in a 52-week range of $56.59 to $91.30. Shares are down about 17% year to date.
Pioneer Natural Resources CO. (NYSE: PXD): BofA downgraded to an Underperform rating from Neutral and cut the price target to $244 from $272, implying upside of 15% from the most recent closing price of $211.00. The stock traded around $228 on Thursday, in a 52-week range of $137.54 to $288.46. Shares are up more than 29% year to date. It has a dividend yield of 5.6%.
Southwestern Energy Co. (NYSE: SWN): BofA upgraded to a Buy rating from Neutral and raised the price target to $13 from $11, implying upside of 115% from the most recent closing price of $6.06. The stock traded around $7 on Thursday, in a 52-week range of $3.81 to $9.87. Shares are up more than 57% year to date.
Canadian Natural Resources Ltd. (NYSE: CNQ): Leggate upgraded to a Buy rating from Neutral with an unchanged price target of $100, implying upside of 105% from the most recent closing price of $48.81. The stock traded around $53 on Thursday, in a 52-week range of $29.53 to $70.60. Shares have gained more than 24% year to date. It has a dividend yield of 4.7%.
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