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Hess Upgraded to “Buy” at Citigroup, but Target Lowered; Stock Still “High Risk” (HES)

By Dividend.com,  July 20, 2012, 09:26:24 AM EDT

Oil producer Hess Corp. ( HES ) on Friday received some mixed commentary from analysts at Citigroup.

The firm upgraded HES from "Neutral" to "Buy" but cut its price target from $65 to $57. That new target suggests a nearly 27% upside to the stock's Thursday closing price of $44.99.

A Citigroup analyst commented, "We are upgrading HES to Buy from Neutral. We maintain our High Risk rating. Our upgrade is based on our belief that the HES's historical spending patterns and lack of capital discipline will change. We expect the company will reduce capital intensity, reduce exploration spending and sell nonstrategic assets. We estimate asset sales will provide additional liquidity while HES moves through its stated peak spending this year. We are reducing our target price to $57 to reflect Citi Research's expectation for lower oil prices through 2013. We have also reduced our valuation to take into account a historic pattern of uneconomic exploration activity, which we may remove pending a more visible reduction in exploration spending."

Hess shares were mostly flat in premarket trading Friday.

The Bottom Line
Shares of Hess Corp ( HES ) have a .89% dividend yield, based on last night's closing stock price of $44.99. The stock has technical support in the $40 price area. If the shares can firm up, we see overhead resistance around the $47-$50 price levels.

Hess Corp. ( HES ) is not recommended at this time, holding a Dividend.com DARS™ Rating of 3.0 out of 5 stars.

Be sure to visit our complete recommended list of the Best Dividend Stocks , as well as a detailed explanation of our ratings system here .




The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.


This article appears in: Investing, Stocks

Referenced Stocks: HES



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