Barclays Downgrades Range Resources To Underweight

On Thursday, Barclays issued a company note on Range Resources Corp. RRC amid the global turmoil in the oil and gas industry. Analysts at Barclays downgraded Range Resources from Equal Weight to Underweight and lowered the price target to $24.

Thomas Driscoll, an analyst at Barclays, wrote, "While the company has a deep inventory of attractive drilling locations, it faces cost structure challenges and it has a levered balance sheet [...]We are lowering 2016 cash flow and EBITDA roughly 11 percent and 8 percent."

Related Link: Susquehanna Cuts Oil Production Forecast, Raises Price Targets For 4 E&Ps

Justification

Analysts at Barclays gave one key reason why they downgraded Range Resources and lowered their price target: low growth and challenging cash flow.

Barclays noted that cash flow before hedges is negative at current strip prices, which puts a large amount of pressure on Range Resources' business operations. Furthermore, the company may have a challenging time growing with depressed oil prices as drilling locations have become a less lucrative investment. Going forward, while analysts believe Range Resources deserves a 40–45 percent premium to their peers in this difficult macroeconomic environment, the company will face many headwinds that can detract value from shareholders.

Range Resources last traded at $31.17.

date
ticker
name
Price Target
Upside/Downside
Recommendation
Firm
Posted In: Analyst ColorLong IdeasPrice TargetCommoditiesMarketsAnalyst RatingsTrading IdeasBarclayse&pgasOilThomas Driscoll
Benzinga simplifies the market for smarter investing

Trade confidently with insights and alerts from analyst ratings, free reports and breaking news that affects the stocks you care about.

Join Now: Free!

Loading...