NEW YORK (TheStreet) -- BMO Capital Markets downgraded Whiting Petroleum Corp. (WLL) - Get Report stock to "market perform" from "outperform" on Tuesday. The firm also lowered its price target to $13 from $27.
"While Whiting shares have underperformed, we think this reflects elevated leverage and oil weighting and note the historical valuation discount remains unchanged," the firm said in an analyst note.
BMO analysts estimate that the global oil market is oversupplied by close to 1 million barrels per day. Balancing the global oil market requires that a surplus be eliminated, the firm noted.
"The only reliable mechanism to accomplish this is the price of oil," BMO said in an analyst note.
Shares of Whiting Petroleum are up by 2.89% to $8.55 in mid-morning trading on Tuesday.
Crude oil (WTI) is increasing by 1.14% to $36.22 per barrel this morning and Brent crude is gaining by 0.33% to $36.47 per barrel, according to the CNBC.com index.
The Denver-based independent oil and gas company is engaged in exploration, development, acquisition and production of crude oil, NGLs and natural gas.
Insight from TheStreet's Research Team
TheStreet's David Peltier commented on Whiting Petroleum in his Stocks Under $10 weekly roundup. Here's what David had to say about the company:
The company explores for oil and gas in the Permian, Williston and Green River basins. The stock dropped 19% this week, along with the rest of the energy sector. Even so, Whiting has attractive assets and shares appear particularly oversold at current levels. WLL is an Inflection Point stock and has a price target of $51.
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Separately, recently, TheStreet Ratings objectively rated this stock according to its "risk-adjusted" total return prospect over a 12-month investment horizon. Not based on the news in any given day, the rating may differ from Jim Cramer's view or that of this articles's author. TheStreet Ratings has this to say about the recommendation:
We rate WHITING PETROLEUM CORP as a Sell with a ratings score of D. This is driven by multiple weaknesses, which we believe should have a greater impact than any strengths, and could make it more difficult for investors to achieve positive results compared to most of the stocks we cover. The company's weaknesses can be seen in multiple areas, such as its feeble growth in its earnings per share, deteriorating net income, generally high debt management risk, disappointing return on equity and weak operating cash flow.
You can view the full analysis from the report here: WLL