Citigroup: Buy Anadarko Now, While It's Still Undervalued

High-priced acquisitions, disappointing growth, weak performances at high profile developments and a surprise tax increase in Algeria are dampening the market’s view of Anadarko Petroleum Corp. (APC), so investors should buy before the second half of the year to take advantage of this undervaluation, Gil Yang at Citigroup told clients.

The analyst thinks several catalysts lie ahead, including possible good news on first production and ramp up at Anadarko’s Independence Hub deepwater gas project, continued ramp up of Coal Bed Methane production, several upcoming exploration projects, as well as other potential developments in the second half of the year.

Citigroup is raising its rating on Anadarko shares to “buy” from “hold,” while raising its price target to US$61 from US$51, which represents upside of roughly 25%.

APC 1-yr chart: