This 12 months has been a traditionally brutal 12 months for oil shares, with a pricing battle between Russia and Saudi Arabia coupled with COVID-19 journey restrictions pushing WTI crude oil costs briefly into unfavorable territory for the primary time in historical past.
Nevertheless, the oil market has since stabilized, and one analyst stated Thursday it may lastly be time for buyers to begin dipping their toes within the oil providers area.
Bank of America analyst Chase Mulvehill issued rankings and price goal updates all through the oil providers group, together with the next upgrades:
Liberty Oilfield Companies Inc (NYSE: LBRT) upgraded from Impartial to Purchase, price goal raised from $5.50 to $7.50.
Helix Power Options Group Inc (NYSE: HLX) upgraded from Impartial to Purchase, price goal raised from $2 to $4.
Helmerich & Payne, Inc. (NYSE: HP) upgraded from Underperform to Purchase, price goal raised from $15 to 23.
Cactus Inc (NYSE: WHD) upgraded from Underperform to Impartial, price goal raised from $16 to $21.
Even after rallying greater than 54% from the March lows, Mulvehill stated the oil providers group stays down 58% 12 months so far and practically 80% from the start of 2018. Given this aggressive long-term sell-off, he stated oil providers shares have important upside remaining from present ranges.
“Our less cautious view of the sector comes on the heels of a less dire outlook for global oil inventories during 2021, thus setting up for less aggressive US Shale production declines that likely leads to a doubling of US rig activity by YE21,” Mulvehill wrote within the notice.
Whereas the complete group will profit from a better-than-feared restoration, he stated stock choice can be important and oil providers shares with excessive publicity to the US ought to profit before others.
Mulvehill stated Liberty Oilfield is his high stock choose among the many 4 upgrades talked about above. He additionally reiterated a Purchase ranking for Baker Hughes Co (NYSE: BKR) and raised his price goal from $17 to $21, saying Baker Hughes is the one oil providers stock that has the potential to return to prior cycle peak EBITDA.
Fintech Zoom’s Take
The extra optimistic outlook for oil providers is definitely excellent news for buyers. Sadly, analysts have painted a bullish image for this group of shares for years now, however every rally has in the end fizzled out and every downturn has been extra extreme than the final.
Do you agree with this take? E-mail suggestions@Fintech Zoom.com together with your ideas.
Newest Scores for LBRT
DateFirmActionFromTo Might 2020B of A SecuritiesUpgradesNeutralBuy Might 2020Morgan StanleyMaintainsOverweight Might 2020CitigroupMaintainsNeutral
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