NEW YORK (TheStreet) -- Shares of energy company Cimarex Energy (XEC) - Get Report are down 1.73% to $90.68 in early market trading on Thursday after being downgraded to "sell" by TheStreet's Quant Ratings team yesterday.
The rating change reflects the the Denver-based company's multiple weaknesses, which the ratings team believes should have a greater impact on the company than any strengths. These weaknesses could make it more difficult for investors to achieve positive results compared to most of the stocks they cover. Among the areas they feel are negative, and one of the most important, has been poor profit margins.
An unseasonably mild winter in North America and Europe has caused natural gas prices to drop precipitously in recent weeks.
On Tuesday, January natural gas futures fell by 1.2%, and natural gas ETF United States Natural Gas Fund (UNG) dropped 1.8%.
The heating degree days in the lower 48 U.S. states is expected to be less than the 30-year average this winter and less than last year, according to MDA Weather Services.
Separately, analysts at Capital One recently initiated coverage on the stock with an "overweight" rating.
TheStreet's chartist today said of the stock, "To find the next logical chart support area for XEC, we needed to look at a five-year weekly chart, above. The December selloff for XEC broke the late 2013 lows and the 2014/2015 lows. Reading the chart from right to left, we can see that the $75 to $60 area from 2012 to 2013 as the next chart support area."
"Bottom line -- this recent bounce in XEC is likely to run out of steam and be followed by further downside testing," he concluded.