Could Range Resources Finally Reverse Its Downtrend in 2016?
Wall Street analyst ratings for Range Resources
As of March 28, 2016, about 55% of Wall Street analysts rated Range Resources (RRC) as a “buy” and ~40% of analysts rated it as a “hold.” That leaves 5% with “sell” ratings for the stock. The median price target from these recommendations is $35.44, which is ~11% higher than the closing price of $31.84 RRC saw on March 28.
In comparison, based on the median price targets of recommendations from Wall Street analysts, Occidental Petroleum (OXY), EQT Corporation (EQT), and Energen (EGN) have potential upsides of ~8%, ~12%, and ~13%, respectively, from their closing prices on March 28. The SPDR S&P Oil & Gas Exploration & Production ETF (XOP) generally invests at least 80% of its total assets in oil and gas exploration companies, whereas the First Trust ISE-Revere Natural Gas ETF (FCG) invests in natural gas producers.
RRC’s individual recommendations
As shown in the above table, the most recent recommendation of “outperform” comes from Bernstein, which issued its rating on March 29, 2016. Bernstein assigned Range Resources the target price of $39, which is ~23% higher than the closing price of $31.84 on March 28, and expects to see this target price in 12 months.
GMP assigned RRC the highest target price of $55, which is ~73% higher than the stock’s closing price of $31.84 on March 28. GMP issued its RRC recommendation in the first week of February 2016 and did not mention any target date for the target price.
The lowest target prices and positives
Imperial Capital assigned Range Resources the lowest target price of $23, which is ~28% lower than the stock’s closing price of $31.84 on March 28. Imperial Capital issued its Range Resources recommendation in the first week of March 2016 and did not mention any target date for the target price.
Some of the positives for RRC’s stock, as noted by Wall Street analysts, are timely asset sales to enhance liquidity and the ability to raise production despite a reduced capex. In the next part, we’ll discuss production volumes, a key factor in our analysis of RRC.
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