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Oasis Petroleum Inc. Message Board

  • samhill3 samhill3 Oct 8, 2013 9:30 AM Flag

    Target raised from $50 to $60

    October 7, 2013:
    Dougherty & Co maintained a Buy rating on Oasis Petroleum (NYSE: OAS) and raised its price target to $60.00 (from $50.00). The change follows closing of previously announced acquisitions in the Williston Basin.

    Analyst Peter C. Mahon said, "We view the acquisitions as a highly accretive bolt‐ons to the company’s core operations and anticipate meaningful reserve growth as development in the newly acquired areas accelerates. We are reiterating our Buy rating, but raising our price target to $60 to include the acquired assets."

    "Our price target is based on our P3 (proved, probably, and possible) analysis. Our P3 analysis assumes: 1) ~$8.3 billion, or ~$89.00/share in discounted proven and unproven reserves; 2) debt of $2.8 billion; and 3) net working capital of ~$0.60 per share (based on 6/30/13 balance sheet)," he added.

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    • The higher target is nice, but they're a little late. When the acquisition was announced, OAS was right around 40. Why did it take so long for them to do the calculations? Answer: you can't trust a ratings agency, analyst, or financial house. Do your own research and due diligence and you'll be much better off. Their target of 60 is very realistic in the next 4 to 6 months if the price of oil remains close to where it is now.

      • 1 Reply to tarponman61
      • There's still a bunch more analysts who follow OAS who have to still update their coverage. For example one analyst has an age-old target of $44 and I presume he's the one with the lowest earnings estimates too (like 61c for this qtr when OAS actually made 65c last qtr and completions in the Williston strongly accelerated this summer, and then a puny $2.78 for 2014!). To those who can do their in-depth research it is now obvious that the low-ball numbers are obsolete and that they are dragging down the average analyst EPS numbers and the OAS target stock price. But this is good news in that we also know that OAS will beat the EPS estimates because the consensus numbers are skewed too low. Knowing your stock will beat estimates is a good thing, it will bring in buyers. We also know that the stock price will get a boost when these remaining analysts upgrade their numbers and tell their clients, and we also know that the improved consensus EPS numbers and a higher average target stock price will encourage new buyers to come in and buy the stock.

        OAS investors are in a great position right now, there's a lot of positives coming that will goose the stock price.

        I believe the stock will break well above the $60 within the 4-6 months you mention. I suspect it will hit $56 after the next flurry of upgrades at earnings time. And I wouldn't worry too much about the price of oil - it's being supported by the Libyans who are going into an unstoppable civil war, by the Iranians who won't come back to the oil market until late 2014 after exhaustive nuclear-free verification by the West, and by the Iraqies who are also on the brink of outright civil war. If anything, the likelihood is that oil prices will go higher during the next 4-6 months.

        I agree investors should limit the trust they place in analysts. Best is to get ahead of the analysts and then enjoy the benefits of their upgrades. There's a good deal more to come at OAS.

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