Energy Analyst Tweaks of the Week

Last week there wasn't too much news out of the energy sector, but that didn't stop a bevy of analysts from tweaking their estimates and ratings of various companies. We track all the Wall Street firms' performance records in Motley Fool CAPS, in order to see whose opinions really carry some weight.

CAPS All-Stars Stifel Nicolaus and Banc of America Securities are fired up about coal, and both continue to ride out winning outperform calls on sector leader Peabody Energy (NYSE:BTU). Both outfits raised their target price on BTU shares last week.

As I've noted before, a monkey could have made money this year by picking coal companies at random. But how many monkeys, let alone Wall Street analysts, could have known that this was the time for coal to shine? The pair's other successful calls in the space include Stifel's thumbs-up on Alliance Resource Partners (NYSE:ARLP) and BofA's backing of Arch Coal (NYSE:ACI).

An initially puzzling call came from the desk of Lehman Brothers, bearer of a prestigious "Wall Street Best" lucky charm in CAPS. As you can see, Lehman has had plenty of energy-related calls go its way:

Now, one of Lehman's 10 worst calls since we began tracking its performance is its underweighting of independent refiner Frontier Oil (NYSE:FTO). Since it gave Frontier the red thumbs-down back in September, the stock has returned more than 50% to shareholders.

Despite raising its earnings-per-share estimate for the year by 25%, Lehman last week maintained its underweight call on Frontier. This looks like a masochistic move until you look out to its 2008 forecast -- an earnings drop of nearly 24%.

Lehman's time frame is clearly a bit longer than that of some other practitioners -- heck, even my own recent analysis of Frontier didn't look much beyond the company's present quarter. Lehman's call reminds us that it's early innings yet. Respect the lucky charm, I say, and give this savvy stock-picking outfit's longer-term outlook on Frontier some consideration when formulating your own.

If you'd like to add your two cents about these energy companies, or any other stock for that matter, join the 100% free Motley Fool CAPS investing community today. Just click here to get started.

Related Foolishness:

• Saluting Patriot Coal
• Diversity Does a Peabody Good
• Frontier All Charged Up

Fool contributor Toby Shute doesn't own shares in any company mentioned. Alliance Resource Partners is an Income Investor recommendation. We've got an overweight rating on the Motley Fool's disclosure policy.