Source: Zhitong Finance and Economics
Zhitong Financial APP learned that Mizuho analyst Nitin Kumar updated his rating on a group of energy stocks. Among them, analysts listed Exxon Mobil Corp as the first choice for the energy industry in 2023, while giving Western Oil, Devon Energy, ConocoPhillips and other energy stocks "buy" ratings.
The following are the details.
Analysts will$Exxon Mobil (XOM.US)$The rating was upgraded from "neutral" to "buy" and the target price was raised from $90 to $140.Analysts said that while his expectations for the company's performance and cash flow were more conservative than management and consensus expectations, it was "hard to imagine that the company would not be a leader in cash generation" over the next three to five years. Analysts say he listed Exxon Mobil Corp as the industry's top choice in 2023.
The analyst gives$Occidental Petroleum (OXY.US)$"Buy" rating, target price raised to $82 from $81.Analysts believe that Western oil should be compared with InterOil and offshore peers, not with large independent exploration developers. Analysts also believe that the company's low sustained capital expenditure and deep reserve base allow it to manage cash flow priorities, including growth projects, debt reduction and shareholder returns.
The analyst gives$Devon Energy (DVN.US)$The "Buy" rating was lowered from $86 to $82.Analysts said it was undeniable that the stock was trading at a slightly higher price than its large-cap peers, but the company's "fixed + variable" dividend was "sustainable and differentiated and worthy of a valuation premium".
The analyst gives$ConocoPhillips (COP.US)$"Buy" rating, target price raised to $151 from $135.Analysts said that despite some uncertainty about recent capital expenditure and capital efficiency in onshore oilfields, the company's balance sheet and reserves were deep enough to maintain its leading cash-generating capacity.
The analyst gives$Murphy Oil (MUR.US)$"Buy" rating, the target price was lowered to $51 from $53.Analysts say that as the company continues to spend more on the development of the Kings Quay floating production platform in the Gulf of Mexico, he believes the company can maintain steady operating cash flow and increase free cash flow in 2023.
The analyst gives$Pioneer Natural Resources (PXD.US)$A "buy" rating with a target price of $294.Analysts said they were constructive about the stock because he expected the company to improve capital efficiency and focus on projects with higher returns in 2023. Analysts believe this will refocus investors' attention on its strong cash return programme and that the company has "one of the largest reserves of shale oil in the US".
The analyst gives$EQT Corp (EQT.US)$With a "buy" rating, the target price was raised to $64 from $61.Analysts said that while the outlook for US natural gas prices was "depressed" in 2023-2024, the company should be able to achieve higher free cash flow than its peers in 2023 because the "onerous" hedging was over.
Analysts will$Chevron (CVX.US)$The rating was downgraded to "neutral" from "buy" and the target price was raised to $200 from $185.Analysts said he would look for a better entry point for the stock given its high valuation, potential capital efficiency barriers in the Permian region and limited visibility into its long-term reserves.
Analysts will$Phillips 66 (PSX.US)$The rating was downgraded to "neutral" from "buy" and the target price was raised to $121 from $115.Analysts said that although he regarded the company as "one of the most diversified downstream companies in the United States", with superior chemical status, extensive mid-stream assets and large marketing department, he preferred to stay on the sidelines because the valuation premium needs to be supported by an "ambitious plan" by implementation and management to increase cash generation rates by 2025.
Analysts will$Marathon Oil (MRO.US)$The rating was downgraded from "buy" to "neutral", maintaining the target price at $32.Analysts said that while he acknowledged that the company had "done more than most of its peers to return capital to investors since 2021", its core inventory was running out and capital efficiency was likely to decline. In this case, analysts take the stock's current discount multiple for granted and point out that the company's focus should be on long-term sustainability.
Analysts will$Marathon Petroleum (MPC.US)$The rating was downgraded to "neutral" from "buy" and the target price was raised to $133 from $125.Analysts downgraded the stock on valuation grounds, saying its target price based on net asset value had less room to rise compared with peer averages.
Analysts are the first to$Magnolia Oil & Gas (MGY.US)$A "buy" rating with a target price of $32.Analysts said that while the company remained cautious in exploring the Giddings field, it had reduced risk and had enough inventory to support 15 years of drilling at the current rate.
Analysts first gave Laredo Petroleum (LPI.US) an "outperform" rating, with a target price of $55. While the company has been adding assets since 2020, it still lags behind its peers in terms of high-quality inventory depth, analysts say. In addition, analysts say the company's recent operational challenges have reduced investor confidence in its execution, which does not match premium-based valuations.
Analysts are the first to$Matador Resources (MTDR.US)$The "neutral" rating has a target price of $70.Analysts said Matador was "almost" a pure Delaware basin operator and liked the company's differentiation strategy of "not following the current industry obsession with cash returns". However, analysts also pointed out that the tight outlook for service costs, reduced opportunities for mergers and acquisitions and a weak macroeconomic outlook could be adverse factors, especially given the valuation premium of the stock.
Analysts will$Hess Corp (HES.US)$The rating was downgraded to "neutral" from "buy" and the target price was raised to $164 from $150.Analysts say the company is almost entirely focused on development in Guyana, which is not in line with the current model of short-cycle oil and gas investment. Analysts believe the company has less upside than its peers but has a higher price-to-earnings ratio driven by its strategy.
Analysts are the first to$Gulfport Energy (GPOR.US)$The "neutral" rating has a target price of $92.Analysts said that although the company's balance sheet leverage ratio was lower than that of its peers and the stock was trading at a discount, he was concerned that the company's "secondary operating scale would lead to more execution volatility".
The analyst gives$Diamondback Energy (FANG.US)$"Buy" rating, the target price was lowered to $195 from $211.Analysts say the company has focused on low-cost operations since its inception, making it an integrator of Permian basins. Analysts believe that the company's "low-cost advantage should continue to play."
The analyst gives$Ovintiv (OVV.US)$With a "buy" rating, the target price was raised to $68 from $61.The company's previous failure to achieve profitability and improved capital guidance led investors to question its inventory depth and execution. However, analysts believe that the company's ability to maintain free cash flow in 2023 is better than that of its peers, which combined with an increase in cash returns could be positive for the stock.
Analysts are the first to$Earthstone Energy (ESTE.US)$The "neutral" rating has a target price of $19.Analysts say that while the company has achieved its goal of a reasonable size of the Permian basin through timely acquisitions, it still needs to achieve stability in its operations and trading activities. Analysts are cautious about the company's well production in the southern Midland area.
Analysts will$EOG Resources (EOG.US)$The rating was downgraded to "neutral" from "buy" and the target price was raised to $160 from $155.Analysts say that while the company has given priority to highly economical drilling, he is concerned about its near-and long-term capital efficiency. Analysts also said that compared with their peers, the valuation premium of the stock "also makes us hesitate".
The analyst gives$PBF Energy (PBF.US)$With a "buy" rating, the target price was raised to $50 from $43.Analysts said the company, a pure refiner, had "reached an impressive scale", which helped dilute fixed costs and optimise the turnover of its six refineries, which should help allay concerns about its asset execution.
Analysts will$Delek US (DK.US)$The rating was downgraded from "neutral" to "outperform", and the target price was raised from $25 to $30.While the company's net asset value was boosted by a refining outlook "above mid-cycle", the company's shares traded higher than their refining peers, analysts said. Analysts believe the company needs to address its balance sheet leverage and strategic direction more clearly after recent management changes.
Analysts are the first to$PDC Energy (PDCE.US)$A "buy" rating with a target price of $97.Analysts point out that the company's shares trade lower than their peers because of regulatory risks in Colorado and potential M & A risks. But he believes these concerns ignore the company's strong free cash flow and cash return framework, which is "more competitive with large exploration and development projects".
Analysts will$HF Sinclair Corp (DINO.US)$The rating was upgraded from "neutral" to "buy" and the target price was raised from $40 to $60.Analysts point out that the company is a diversified downstream company that has changed significantly in the past few years with the increase in the lubricant business, investment in renewable diesel, the acquisition of the Puget Sound refinery and the merger with Sinclair. Analysts believe the company's valuation is at a discount to its core peers.
Analysts are the first to$Permian Resources (PR.US)$The "neutral" rating has a target price of $13.Analysts said the size of the Delaware merger was "differentiated" and the operational and capital synergies brought about by the deal were "differentiated", assuming they could be achieved. However, analysts believe the company faces the risk of private equity liquidation in the first half of 2023, and he hopes to re-examine this and its operational implementation.
The analyst gives$Coterra Energy (CTRA.US)$"Buy" rating, the target price was lowered to $41 from $42.Analysts said that while concerns about the quality of the company's assets in Appalachia and the macro outlook for natural gas were understandable, the company's leading cash production outlook among its peers, that is, discounts on net asset value and price-to-earnings ratios are "hard to ignore".
Analysts will$Comstock Resources (CRK.US)$The rating was downgraded from "buy" to "neutral" and the target price was lowered from $21 to $17.Analysts believe that by 2025, the outlook for natural gas prices could become very weak, and tight oil field services could also be a disadvantage for the company and affect its exploration. Analysts say he prefers to wait for a better opportunity to buy the stock.
The analyst gives$Range Resources (RRC.US)$For the "neutral" rating, the target price was lowered to $32 from $38.Analysts said that while he was "attracted" by the company's inventory quality, depth and capital efficiency, investing only in the "limited" Appalachian basin posed "operational and pricing risks".
Analysts are the first to$Crescent Energy (CRGY.US)$A "buy" rating with a target price of $19.Analysts said the company's "unique focus" on the acquisition of traditional assets was a key positive factor in the cash return framework, free cash flow and flexibility of capital expenditure related to earnings before interest, tax, depreciation and amortisation (EBITDA).
Analysts are the first to$California Resources (CRC.US)$A "buy" rating with a target price of $60.Analysts say the company is a leader in carbon capture and storage in the "attractive" California market.
Analysts are the first to$SM Energy (SM.US)$A "buy" rating with a target price of $51.Analysts say the company has reduced leverage since 2020 and its management launched a cash return framework in the third quarter, which includes basic dividends and share buybacks. He believes the company has enough inventory to support its spending at a level of activity. Analysts also say that if calls for US oil growth emerge, the company's long-term inventory needs may have to be addressed.
Analysts are the first to$Callon Petroleum (CPE.US)$A "buy" rating with a target price of $59.Analysts said that while the company lagged behind its peers in terms of good performance and cash returns, it was meeting its balance sheet targets and consensus expectations had been reset.
Analysts are the first to$CNX Resources Corp (CNX.US)$"outperform" rating, with a target price of $19.Analysts say that while the company has been able to realize its multi-year prospects in recent years and generate free cash flow through the natural gas price cycle, given the infrastructure investment currently required for development area outside the core development area, its capital efficiency is likely to decline in the future.
Analysts will$Southwestern Energy (SWN.US)$The rating was downgraded from "buy" to "neutral" and the target price was lowered from $11 to $9.While the company has expanded in the geographically located Haynesville region, its leveraged and associated hedging positions could drag on shareholders' potential cash returns until 2024, analysts said. Analysts said they would like to see a clearer outlook for natural gas and the company's debt reduction.
Edit / Corrine