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Pioneer Natural Resources Recovers From Beating in S&P Energy Rout

Updated from 9:27 a.m. EDT with recent share prices and comments from analyst reports.

NEW YORK (TheStreet) -- Energy stocks of the S&P 500 were bouncing back Wednesday after leading the selloff Tuesday. Shares of energy stocks in the index were collectively up more than 1% in the first hour of trading after falling 2.14% on Tuesday.

Pioneer Natural Resources (PXD - Get Report) led those decliners Tuesday, falling 5.6% to $209.98. At 10:30 a.m. EDT on Wednesday, shares of Pioneer were up 1.75% to $213.65. Pioneer announced quarterly results Monday after the close, missing analysts' estimates for revenue even as it beat on earnings. 

Shares of Exxon Mobil (XOM) also fell nearly 2% in active trading Tuesday but were up almost 1% early Wednesday. Shares of Chevron (CVX) dropped 2.5% to close Tuesday at $124.96, but were likewise bouncing back, up 1.06% on Wednesday. 

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Pioneer reported adjusted net income of $195 million, or $1.35 a share, beating analysts' estimates of $1.28 as polled by Thomson Reuters. Revenue fell to $953 million from $1.16 billion in the same period last year, missing the consensus estimate of $964.05 million. However, revenue from oil and gas was higher than the year-ago period.

The company also announced the sale of its Kansas Hugoton field assets to Linn Energy for $340 million, and the sale of its North Texas Barnett Shale assets to an undisclosed company for $155 million. Both deals are expected to close in the third quarter.

"The sale of these assets will allow us to strategically redeploy capital to our core, oil-related Spraberry/Wolfcamp assets in the Permian Basin of West Texas where we are successfully transforming the substantial resource potential we delineated in 2013 into strong production growth," said Chairman and CEO Scott Sheffield in a press release.

The stock's tumble Tuesday may have been triggered by questions raised by its earnings, but it was also simply a question of timing, coming amid a broader market selloff over concerns of rising tensions in the Ukraine

Analysts covering Pioneer Natural Resources, however, noted some concerns that the stock may still be too richly priced compared to others in the sector.

Oppenheimer - Perform

Although we think PXD should be trading at a valuation premium to its peers because of its strong oil production growth outlook, we believe the surge in the stock price in the last five years made the stock too expensive, and even after the recent correction, the stock is still trading at a significant premium to its peers.

KeyBanc - Buy, 12-month price target of $240 

Long-term positive for shareholders. . . . Operationally, PXD keeps producing on its quality acreage by drilling both in the Eagle Ford and Permian and we are encouraged to see additional steps to remove capital from vertical drilling and allocated toward higher return horizontal drilling. With improved operational designs improving IRR's and a back-end weighted capex profile, we see 2015 estimates as having potential room to the upside.

Stern Agee - Neutral

On an EV/EBITDA basis, PXD trades at 12.5x 2014E EBITDA of $2.63 billion, versus the group average of 7.7x, and at 11.6x 2015E EBITDA of $2.93 billion, versus the group average of 6.1x. On an EV/CF basis, shares trade at 13.4x 2014E Cash Flow of $2.43 billion, versus the group average of 8.8x, and at 12.4x 2015E Cash Flow of $2.75 billion, versus the group average of 6.7x.

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-- Written by Carlton Wilkinson in New York

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