Anadarko Petroleum Impresses Analysts Following Earnings Report

Anadarko Petroleum APC gapped higher into Wednesday trading, but after an already impressive move investors were either indifferent or lost interest because the stock promptly gave back its early morning gains. Anadarko Petroleum beat consensus EPS estimates by 2 cents in the second quarter. Analysts liked what came out of the earnings conference. The stock is up by 0.56 percent in the Wednesday afternoon session. Morgan Stanley reiterates overweight rating $135 price target (24% upside): “Anadarko is a best-in-class operator with a deep portfolio of highly economic projects, but trades in-line with the group (6.5x 2015e EV/DACF vs. peers at 6.2x). With the Tronox saga approaching its end (3Q14/4Q14 settlement), we believe APC will reclaim its premium valuation through increased funding and accretive share buybacks from active portfolio monetization.” Wells Fargo reiterates outperform rating: $120 - $130 price target range: “Although shares are up 27% YTD vs. the EPX, we think there remains a significant amount of upside potential (e.g. portfolio optimization, shareholder returns, acceleration, etc.). With APC trading at 5.5x 2015E EV/EBITDAX vs. EOG's 6.2x and NBL's 6.3x, shares continue to appear attractive. Our revised 2014/2015 EPS estimates are $5.58/$6.36 from $5.48/$6.17.” Deutsche Bank reiterates buy rating $137 price target: “APC has a track record of asking investors to look beyond quarterly results towards the value potential of the portfolio. This focus has been warranted by both management's track record but also a willingness to engage in discussions surrounding how best to create shareholder value. With the resolution of Tronox liabilities, expect the focus to shift back to positive underlying operating trends (onshore US oil growth) and the potential for further monetization / sell-down of major assets in 2014 / 2015. Our base expectation is that shareholder friendly moves will further narrow the gap between the equity and NAV.” UBS reiterates buy rating $127 price target: "Clean 2Q EPS of $1.32 (+26%YoY) was above consensus of $1.29 but below UBSe of $1.32; notably, much higher than expected exploration expense hurt EPS by $0.33/share. APC raised 2014 production guidance to 819-827 MBoed from 803-816 MBoed enabling ~10% YoY growth adjusted for asset sales. The majority of the guidance increase was liquids, which we forecast to increase 21% YoY while natgas slips 2% YoY."