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Strength Seen in Laredo Petroleum (LPI): Can Its 8.2% Jump Turn into More Strength?

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·2 min read
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Laredo Petroleum (LPI) shares soared 8.2% in the last trading session to close at $40.26. The move was backed by solid volume with far more shares changing hands than in a normal session. This compares to the stock's 4.2% gain over the past four weeks.

Laredo Petroleum extended its rally for the second straight day, driven by optimism over rising commodity prices spurred by vaccine-related developments, accelerating economic growth and an improving demand picture. The recently announced transformative acquisitions and divestitures also reflected positively on the stock price. On May 9, the Permian Basin-focused crude producer agreed to buy high-margin, oil-weighted assets in Howard County for $715 million, while offloading legacy gas properties in Glasscock and Reagan counties for proceeds of $405 million. Further, an improving macro environment for energy and the strategic transactions prompted Seaport Global Securities to raise the price target on Laredo Petroleum.

Price and Consensus

Price Consensus Chart for LPI
Price Consensus Chart for LPI

This oil and natural gas company is expected to post quarterly earnings of $3.69 per share in its upcoming report, which represents a year-over-year change of +51.9%. Revenues are expected to be $224.68 million, up 103.2% from the year-ago quarter.

Earnings and revenue growth expectations certainly give a good sense of the potential strength in a stock, but empirical research shows that trends in earnings estimate revisions are strongly correlated with near-term stock price movements.

For Laredo Petroleum, the consensus EPS estimate for the quarter has been revised 22.6% higher over the last 30 days to the current level. And a positive trend in earnings estimate revision usually translates into price appreciation. So, make sure to keep an eye on LPI going forward to see if this recent jump can turn into more strength down the road.

The stock currently carries a Zacks Rank 3 (Hold). You can see the complete list of today's Zacks Rank #1 (Strong Buy) stocks here >>>>


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