Seeking Alpha
  • Today - Friday, December 19, 2014

  • 7:59 AM
    • Seadrill (NYSE:SDRL) -5.9% premarket after shares are downgraded to Sell from Neutral at Goldman Sachs after issuing an upgrade just three weeks ago.
    • Also, yesterday's cancellation of the planned swap of gas assets between Gazprom and BASF may not bode well for the future of North Atlantic Drilling's (NYSE:NADL) $4.2B rig contract with Rosneft.
    | 23 Comments
  • Thursday, December 18, 2014

  • 12:54 PM
    • Phillips 66 (PSX -0.2%) is upgraded to Buy from Hold while fellow refiner Valero Energy (VLO -2.2%) is downgraded to Hold from Buy at Deutsche Bank.
    • On PSX, the firm notes that fears of margin pressure on the CPChem and DCP segments are somewhat warranted given the oil price backdrop, but still thinks shares are pricing in a fairly draconian scenario as investors overstate PSX’s exposure; on its sum-of-the-parts analysis, the firm thinks investors are getting the refiner segment essentially for free.
    • Deutsche Bank cites valuation and its more cautious view on the sector in its VLO downgrade, as concerns around persistent weakness in Gulf coast refining margins coupled with currently narrow WTI-Brent differentials keep it on the sidelines for now.
    | 8 Comments
  • 11:43 AM
    • RBC upgrades Baker Hughes (BHI -1.2%) to Outperform from Sector Perform with a $72 price target, but the praise isn't earning the gains enjoyed by Key Energy (KEG +38.1%) and Superior Energy (SPN +4.5%) after the firm's similar upgrades.
    • RBC likes BHI in its belief that sentiment will start to shift on North American land names as the oil price improves throughout 2015; BHI and Halliburton both generate ~50% of their operating income in North America, the firm notes.
    • BHI continues to trade at a discount to the deal price of its merger with HAL, and should trade closer to the deal price throughout the year assuming U.S. government hurdles are met.
    | 2 Comments
  • 9:59 AM
    • RBC recommends increasing weightings and exposure to oil service stocks (OIH +2.5%) heading into 2015, as it says oil prices will start to improve in H2 of next year and that oil service stocks typically discount this move by 6-9 months.
    • Down cycles such as 2000-02 and 2008-09 suggest North American land drillers and service companies provide the best returns off business cycle lows, RBC says as it expects a similar dynamic this time.
    • RBC upgrades Key Energy (KEG +24.6%) and Superior Energy (SPN +7.5%) to Outperform, and downgrades FMC Tech (FTI +1.8%), Franks (FI +4.9%), Oceaneering (OII +0.2%) and Oil States (OIS +2.3%) to Sector Perform; the firm also says since 1985 three of the top five performing stocks off lows have been Patterson-UTI (PTEN +6.6%), Precision Drilling (PDS +4%) and Nabors (NBR +7.2%).
    | 3 Comments
  • Wednesday, December 17, 2014

  • 2:52 PM
    • PG&E (PCG +0.3%) is downgraded to Hold from Buy with a $52 price target, down from $54, at Deutsche Bank, which says it is now clear that the California Public Utilities Commission will not issue final decisions in the San Bruno investigations by year-end; previously, the firm had believed the CPUC would feel some pressure to resolve the cases by then.
    • The firm feels PCG eventually can regain its premium valuation, but such a path continues to be uncertain and potentially lengthy.
    | Comment!
  • 1:42 PM
    • "Our broader sector call is that enterprise spending on security IT will again be very strong in 2015, if not stronger than in 2014. Throughout 2014, we flagged PANW, FTNT and PFPT as our top security picks and we’re now adding CHKP to this short-list," says Deutsche's Karl Keirstead. He's upgrading the firewall/security software vendor to Buy, and hiking his target by $20 to $90.
    • Keirstead considers Check Points's (CHKP +1.9%) multiples (18x and 11.7x 2015E EPS and free cash flow, respectively) attractive given its security exposure and accelerating growth (potentially 11% Y/Y in Q4 vs. 3%-4% for much of 2013).
    • With the aforementioned peers having significantly outperformed Check Point this year, Keirstead thinks "investors are likely to look more aggressively at CHKP shares as a cheaper way to play the security theme with more limited downside risk."
    • Shares are $2 away from a high of $78.78. They rallied in October in response to a Q3 beat and healthy Q4 guidance. A weak euro and Palo Alto Networks' firewall share gains have been seen as potential headwinds.
    | Comment!
  • 12:41 PM
    • Teck Resources (TCK +10.2%) is upgraded to Buy from Hold with a C$20 price target at UBS, which believes its dividend can be funded at lower prices.
    • UBS thinks TCK's Fort Hills oil sands project in Alberta should realize net backs of ~C$45/bbl vs. C$65/bbl previously, adding that while project economics deteriorate with lower oil prices, Fort Hills could benefit from other factors including a lower oil differential, lower diluent, and likely a lower Canadian dollar.
    • To fund the dividend, cover capex, and pay debt, the firm estimates TCK needs to generate C$7.3B during 2015-17 and that TCK can generate ~C$6B in operating cash flow, indicating that, while it would have to draw on the revolving credit facility, TCK could maintain the dividend (if it choose to) given cash of $1.7B and undrawn credit of $3B as of Sept. 30.
    • Separately, TCK also announces the first shipment of zinc and lead in concentrate from its restarted Pend Oreille operations in Washington state to its nearby Trail perations in B.C. for processing.
    | Comment!
  • 12:26 PM
    • FBR Capital chooses Noble Energy (NBL +8.8%), Schlumberger (SLB +4.6%), Synergy Resources (SYRG +6%), Consol Energy (CNX +3.4%) and SunEdison (SUNE +0.7%) as its top energy and natural resources stocks for 2015.
    • FBR likes NBL's strong combination of shale assets that are still immature in their adoption and application of technology, which is scalable; a strong balance sheet; and a portfolio that offers abundant exploration risk/reward potential.
    • SLB is FBR's favorite energy stock among those whose secular earnings power is clearly the most likely to significantly expand over the next five years and/or is underestimated at current market multiples.
    • SYRG offers investors exposure to industry-leading production growth and a solid balance sheet, a unique combination for a small-cap equity, the firm says.
    | 8 Comments
  • 11:55 AM
    • The fundamentals underlying oil and gas pipeline MLPs have fallen much less than energy stocks in recent days, acording to Forbes' John Dobosz, who suggests seeking out MLPs with a long history of rising distributions, payouts well covered by cash flow, a strong balance sheet and an investment-grade credit rating.
    • Two MLPs that fit these criteria, Dobosz writes, are Enterprise Products Partners (EPD +3.2%) and Magellan Midstream Partners (MMP +3.9%); he also likes Sunoco Logistics Partners (SXL +5.2%), which is expected to increase revenue 15% to $22B in 2015, with EBITDA rising 20% and distributions growing 18% this year.
    • Spectra Energy Partners (SEP +2.3%), Western Gas Partners (WES +2.7%) and Energy Transfer Partners (ETP +2.4%) are appealing because of consistently rising distributions and revenues, Dobosz adds.
    | 8 Comments
  • 6:57 AM
    | Comment!
  • Tuesday, December 16, 2014

  • 7:21 PM
    • "Low oil prices cure low oil prices,” meaning that low oil prices will take supply off line - primarily shale oil production in North America - and eventually prices will recover; if that maxim becomes reality, then it could be time pick up select energy stocks today at cheap prices, some analysts say.
    • U.S. Global Investors' Brian Hicks, who believes oil is oversold, favors Devon Energy (NYSE:DVN) for its low-cost Eagle Ford acreage purchased earlier this year, solid cash flow, and significant hedges in place on 2015 production; he also likes oil services companies Noble Corp. (NYSE:NE) and Helmerich & Payne (NYSE:HP).
    • Hodges Capital's Michael Breard likes North American oil producers that have the flexibility to shift to natural gas - where prices are more likely to hold up, he says - such as Matador Resources (NYSE:MTDR), Comstock Resources (NYSE:CRK) and Panhandle Oil and Gas (NYSE:PHX).
    • Deutsche Bank analysts like companies with the balance sheet strength to survive, but also the budget flexibility, asset quality and performance record to suggest they can return to growth when energy prices go back up, including Anadarko (NYSE:APC), EOG Resources (NYSE:EOG), Cimarex (NYSE:XEC) and Concho Resources (NYSE:CXO).
    | 8 Comments
  • 4:37 PM
    • Cliffs Natural Resources (NYSE:CLF) -9.2% AH after Credit Suisse cuts its stock price target to $1, saying CLF seems to lack any long-term valuation support.
    • CLF's progress on strategic initiatives has been positive, Credit Suisse analyst Nathan Littlewood writes, but balance sheet “handicap is simply too great,” and the 2015 forecast will be a key catalyst for investors, as current consensus estimates are “nearly double” what they should be.
    | 12 Comments
  • 3:59 PM
    • Internet stocks have posted substantial losses after a morning market rally proved short-lived. The Nasdaq is down 1.2%.
    • In addition to Google, which has made new 52-week lows, Facebook (FB -3%), Twitter (TWTR -4.7%), Amazon (AMZN -3.5%), and Netflix (NFLX -3.2%) are among the underperforming names. Other decliners: Z -5.5%. TRLA -5.4%. MELI -5.4%. ZNGA -4.9%. ZU -3.2%. ANGI -3.4%.
    • The selloff comes even though Goldman upgraded its rating for the sector to Attractive from Neutral today. The firm noted Internet stocks are collectively down 16% over the last 12 months (maybe 18%-19% after today), and that forward EV/EBITDA multiples have contracted significantly.
    • Internet/social media ETFs: FDN, PNQI, SOCL
    | 12 Comments
  • 3:58 PM
    • Morgan Stanley updates its outlook on gold miners, favoring companies that are either entering their harvest phase or sporting flexible pipelines, low political risk and reasonable costs.
    • With this in mind, the firm upgrades Franco-Nevada (FNV -0.2%) to Overweight from Equal Weight and raises its price target to $61 from $57.50, viewing the recent weakness from FNV’s oil price exposure as an opportunity to add a high quality royalty company with a strong balance sheet and well diversified portfolio; as FNV’s new metal assets begin to contribute, its oil exposure declines from 20% of revenue to less than 12% going forward.
    • Meanwhile, Stanley downgrades Royal Gold (RGLD -4.1%) to Equal Weight from Overweight, as its original thesis has played out that as the Mt. Milligan project ramps up and metal deliveries to RGLD increase, the stock’s multiples would expand.
    | Comment!
  • 12:37 PM
    • Wunderlich downgrades oil drillers Basic Energy Services (BAS +11.7%) and Key Energy Services (KEG -2.6%) to Sell from Hold and Pioneer Energy Services (PES +12.8%) to Hold from Buy, as the greatly reduced 2015 activity outlook likely hits all three very hard both operationally and financially.
    • While the full impact of the oil price collapse has not been felt yet, "rest assured the pain is coming - and coming soon," the firm says, adding that the current downturn is even more scary than in 2008-09 because "this time it looks as if there is no basin or commodity to shift activity into."
    • Nevertheless, a broad array of energy stocks have turned around from early morning losses to move higher.
    | 1 Comment
  • 9:24 AM
    • Citing the value-creation potential of forming a YieldCo, Morgan Stanley has upgraded SunPower (NASDAQ:SPWR) to Overweight, and set a $35 target.
    • Like many other solar names, SunPower has plunged in tandem with crude prices. Shares now go for 1.3x 2015E sales.
    • The company stated at last month's analyst day its YieldCo plans remain "under review."
    | Comment!
  • 8:31 AM
    • Baird drops LGCY to Neutral from Outperform, citing collapse in oil prices.
    • Cuts price target to $9 from $25. Implies 14.7% downside.
    • Firm anticipates upstream MLPs will be forced to cut distributions when debt covenants are triggered.
    | 2 Comments
  • 8:29 AM
    • Baird drops LINE to Neutral from Outperform, citing collapse in oil prices.
    • Cuts price target to $10 from $21. Implies 1.8% upside.
    • Firm anticipates upstream MLPs will be forced to cut distributions when debt covenants are triggered.
    | 8 Comments
  • 8:28 AM
    • Baird drops LNCO to Neutral from Outperform, citing collapse in oil prices.
    • Cuts price target to $10 from $21. Implies 9.2% upside.
    • Firm anticipates upstream MLPs will be forced to cut distributions when debt covenants are triggered.
    | 16 Comments
  • 7:53 AM
    | Comment!
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