Why Cimarex Energy Co Shares Could Pop Another 25%

While Fools should generally take the opinion of Wall Street with a grain of salt, it's not a bad idea to take a closer look at particularly stock-shaking upgrades and downgrades -- just in case their reasoning behind the call makes sense.

What: Shares of Cimarex Energy Co (NYSE: XEC  ) gained slightly on Tuesday after Global Hunter Securities upgraded the oil and gas explorer from neutral to buy.

So what: Along with the upgrade, analyst Mike Kelly boosted his price target to $175 (from $116), representing about 25% worth of upside to yesterday's close. So while contrarian traders might be turned off by Cimarex's price strength over the past month, Kelly's call could reflect a sense on Wall Street that its production growth prospects still aren't fully baked into the valuation.

Now what: According to Global Hunter, Cimarex's risk/reward trade-off remains particularly attractive. "We're confident that XEC's recent boost to its underlying growth rate isn't a fluke," said Kelly. "In fact, we now expect further acceleration in 2015 (+24% growth in 2015 vs. +20% in 2014). Recent notable improvements in individual well recoveries across the company's Permian & Mid-continent acreage positions stemming from revised completion techniques (XEC is now implementing larger fracs with more stages/higher fluid & sand volumes) are also a big driver of our increased NAV value." When you couple that upbeat outlook with Cimarex's industry-topping margins, it's tough to disagree with Global Hunter's bullishness.

Do you know this energy tax "loophole"?
You already know record oil and natural gas production is changing the lives of millions of Americans. But what you probably haven't heard is that the IRS is encouraging investors to support our growing energy renaissance, offering you a tax loophole to invest in some of America's greatest energy companies. Take advantage of this profitable opportunity by grabbing your brand-new special report, "The IRS Is Daring You to Make This Investment Now!," and you'll learn about the simple strategy to take advantage of a little-known IRS rule. Don't miss out on advice that could help you cut taxes for decades to come. Click here to learn more.

 


Read/Post Comments (0) | Recommend This Article (1)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2997868, ~/Articles/ArticleHandler.aspx, 12/22/2014 12:54:25 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement