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Wunderlich Cuts Crude Oil Price Targets, But Remain Bullish On These 5 Energy Stocks

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Wunderlich Securities recently released a report in which analysts drastically cut their outlook for crude oil prices. In the report, analysts explain how they see the oilfield services sector adapting to the new low-price environment. The report also includes several names on which Wunderlich remains bullish.

How Will Companies Adapt?

It is widely expected that many upstream oil companies will not survive this collapse on oil prices, but Wunderlich analysts believe that bankruptcies will not be common in the sector. Instead, they expect distressed companies to turn to M&A to survive. Buyouts, mergers and asset fire-sales could become typical in the oil sector in upcoming months as companies struggle to survive by becoming leaner and more efficient.

Crude Oil Targets Slashed

Analysts drastically reduced Wunderlich’s targets for crude oil prices for 2015 and beyond. The new 2015 estimates for WTI and Brent included in the report were $70 and $72 per barrel, respectively. Both of these new targets represent a more than 20 percent reduction from previously stated targets.

Wunderlich’s 2016 price projections for WTI and Brent are $75 and $77 per barrel, respectively. For the longer-term outlook, analysts project $85 per barrel for WTI and $88 per barrel for Brent.

Stock picks

Despite all the gloom, Wunderlich analyst Jason Wangler still likes several oil and natural gas names. "We remain bullish on names with high-spec equipment, unique strategies, and product offerings."

Wunderlich maintains Buy ratings on the stocks of:

Seventy Seven Energy Inc (NYSE: SSE)

Chesapeake Energy Corporation (NYSE: CHK)

Natural Gas Services Group, Inc. (NYSE: NGS)

TETRA Technologies, Inc. (NYSE: TTI)

Superior Drilling Products, Inc. (NYSE: SDPI)

Latest Ratings for SSE

DateFirmActionFromTo
Nov 2015GuggenheimUpgradesNeutralBuy
Aug 2015SunTrust Robinson HumphreyDowngradesBuyNeutral
May 2015JefferiesUpgradesHoldBuy

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