Capital One Southcoast Upgrades Energy Stocks CRZO, PQ, SGY & UPL After 4th Annual Energy Conference
CRZO Hot Sheet
Rating Summary:10 Buy, 3 Hold, 0 Sell
Rating Trend:
Down
Today's Overall Ratings:
Up: 16 | Down: 7 | New: 23
Capital One Southcoast upgrades Energy stocks after 4th Annual Capital One Southcoast Energy Conference.
Capital One analyst says, "This morning we are upgrading Carrizo Oil & Gas (Nasdaq: CRZO), PetroQuest Energy (NYSE: PQ), Stone Energy (NYSE: SGY), and Ultra Petroleum (NYSE: UPL) to ADD from NEUTRAL based on valuation as the share price for each company is 17%-31% below our target prices. Although we are concerned that the natural gas supply/demand imbalance may be improving slower than expected, as evidenced by the EIA 914 report issued Friday, we believe our commodity price deck of $5 natural gas for 2010 and $6.50 thereafter is conservative. For oil, we model $70/bbl next year and $75/bbl for 2011+. The current 2010 strips are $5.76/Mcf and $80/bbl, and the 2010-2012 strips are $6.40/Mcf and $82.89/bbl."
"We are upgrading CRZO to ADD from NEUTRAL while maintaining our $30 target price: The stock has declined 20% since our downgrade three weeks ago, and our target now offers 29% upside potential. Near-term growth is driven by the Barnett ($28 per share). We model $7 per share of North Sea value, which could be monetized to pay down their $18 per share in debt. Over the next year, we'll look for CRZO's initial results in the Marcellus ($8 per share in value.)"
"We are upgrading PQ to ADD from NEUTRAL while maintaining our target of $8: The shares have fallen 24% since our October 15 downgrade, and the current 31% upside to our target price warrants the upgrade. PQ is in a solid liquidity position with an estimated $100MM in cash available at YE09..."
"We are upgrading SGY to ADD from NEUTRAL while maintaining our $18 target price: SGY shares have dropped 17% since our mid-September downgrade and are now 17% below our target price. We believe the company's significant oil exposure (48% of current production and 42% of YE08 1P) and upside potential warrant the upgrade."
"We are upgrading UPL to ADD from NEUTRAL while raising our target price to $59 from $57: UPL has fallen 16% from its highs two weeks ago and 11% since our downgrade three weeks ago. With 22% upside to our new $59 valuation, UPL deserves an ADD rating. On Friday's release, UPL beat our production numbers by 2%, and we increased our 2009 growth estimates from 22% to 23%. UPL described their 2010 and 2011 production growth guidance of 15%-20% as conservative, which usually means they will beat the high end of guidance. We are increasing our 13% growth estimate to 15% but wouldn't be surprised if they beat our numbers, particularly if they continue their streak of success in the Marcellus."
Capital One analyst says, "This morning we are upgrading Carrizo Oil & Gas (Nasdaq: CRZO), PetroQuest Energy (NYSE: PQ), Stone Energy (NYSE: SGY), and Ultra Petroleum (NYSE: UPL) to ADD from NEUTRAL based on valuation as the share price for each company is 17%-31% below our target prices. Although we are concerned that the natural gas supply/demand imbalance may be improving slower than expected, as evidenced by the EIA 914 report issued Friday, we believe our commodity price deck of $5 natural gas for 2010 and $6.50 thereafter is conservative. For oil, we model $70/bbl next year and $75/bbl for 2011+. The current 2010 strips are $5.76/Mcf and $80/bbl, and the 2010-2012 strips are $6.40/Mcf and $82.89/bbl."
"We are upgrading CRZO to ADD from NEUTRAL while maintaining our $30 target price: The stock has declined 20% since our downgrade three weeks ago, and our target now offers 29% upside potential. Near-term growth is driven by the Barnett ($28 per share). We model $7 per share of North Sea value, which could be monetized to pay down their $18 per share in debt. Over the next year, we'll look for CRZO's initial results in the Marcellus ($8 per share in value.)"
"We are upgrading PQ to ADD from NEUTRAL while maintaining our target of $8: The shares have fallen 24% since our October 15 downgrade, and the current 31% upside to our target price warrants the upgrade. PQ is in a solid liquidity position with an estimated $100MM in cash available at YE09..."
"We are upgrading SGY to ADD from NEUTRAL while maintaining our $18 target price: SGY shares have dropped 17% since our mid-September downgrade and are now 17% below our target price. We believe the company's significant oil exposure (48% of current production and 42% of YE08 1P) and upside potential warrant the upgrade."
"We are upgrading UPL to ADD from NEUTRAL while raising our target price to $59 from $57: UPL has fallen 16% from its highs two weeks ago and 11% since our downgrade three weeks ago. With 22% upside to our new $59 valuation, UPL deserves an ADD rating. On Friday's release, UPL beat our production numbers by 2%, and we increased our 2009 growth estimates from 22% to 23%. UPL described their 2010 and 2011 production growth guidance of 15%-20% as conservative, which usually means they will beat the high end of guidance. We are increasing our 13% growth estimate to 15% but wouldn't be surprised if they beat our numbers, particularly if they continue their streak of success in the Marcellus."
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