What happened
Shares of Helix Energy Solutions Group Inc (HLX 2.54%) soared 33.3% last month thanks to a combination of higher oil prices, strong first-quarter results, and a string of analyst upgrades.
So what
Crude prices continued rebounding last month, which helped lift nearly the entire oil sector. The global oil benchmark, Brent, led the way, rising 7.7% to roughly $75 a barrel, which was its best level since late 2014. Several factors drove crude higher, including healthy demand growth and tamer supply growth. Those higher prices increase the likelihood that oil companies will invest more money into offshore drilling projects, which would be good for Helix Energy Solutions' service business.
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Higher oil prices over the past several months are already having a notable impact on Helix's financial results, which was evident when the company reported expectation-trouncing first-quarter earnings in April. Revenue jumped 57% year over year to $164.3 million, which came in $18.3 million ahead of analysts' expectations. Helix also posted a narrower net loss of $0.02 per share, which was $0.04 per share better than the consensus estimate. Because of this strong showing, Helix increased its full-year revenue guidance from a range of $685 million-$730 million up to $695 million-$740 million.
The stronger-than-expected results and improved revenue outlook led several analysts to upgrade Helix Energy Solutions' stock last month. Piper Jaffray boosted its rating from neutral to overweight while increasing its price target from $7.10 to $9 per share on the view that Helix's earnings outlook is improving. Raymond James, meanwhile, upgraded the stock from market perform to outperform and also set a $9 price target. Driving that bullish view is the company's improving outlook thanks to growing demand and declining costs.
Now what
With oil at its best level in three years, Helix Energy Solutions should see more service work head its way in the coming quarters, which would further boost its financial results. That's why analysts still see more upside in the stock even after last month's big run. Shares, however, aren't as cheap as they were, so investors might want to consider buying one of these oil stock bargains instead.
