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: Shares of drilling services company Pioneer Energy Services Corp. (NYSE:PES) jumped as much as 12% today after an analyst upgrade.
So what: Wells Fargo upgraded the stock from a "market perform" rating to "outperform" this morning, thinking that shares are undervalued at 73% below its 52-week high. Notably, this move follows a pair of downgrades to "hold," with respective per-share price targets of $5.00 and $5.50, from analysts at Deutsche Bank and Global Hunter Securities.
Now what: Analyst upgrades can cause a short-term pop in a stock, but the ratings aren't historically indicative of long-term success. Investors should also consider that analysts are expecting Pioneer Energy Services to lose $0.74 per share this year and another $0.73 next year, so operations aren't exactly strong. This is a pop I would leave alone and a company I would be worried about trying to buy at the bottom. It's safer to wait until operations turn around, and given the current condition of the energy industry, no one knows when that will be.