Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.
What: After gaining more than 23% earlier in the month, shares of independent oil and gas producer Rosetta Resources, Inc. (NASDAQ: ROSE) were down about 13% as of 12:40 p.m. ET today.
So what: The company released Q4 earnings today, falling short of both earnings and revenue expectations. Additionally, two analysts downgraded their ratings on the stock, from "buy" to "hold," likely compounding the market's reaction to the earnings release.
Now what: The good news from the company's earnings report was that it had replaced all of 2014's oil production with new reserves already, and that it would reduce its drilling program for 2015 and 2016, in an effort to be cash-flow neutral over the period. This is an important step as significant uncertainty remains regarding oil prices in the interim.
Is this sell-off creating a buying opportunity? Frankly, it's really hard to say with any certainty. Many smaller independents will probably be big winners over the next few years, but uncertainty around oil prices makes it difficult to tell whether Rosetta will be one of those winners. There are a handful of oil-field services and midstream companies that look like better, more predictable companies to invest in today.