The firm raised its outlook due to a higher long-term rig count at the company's Midland Wolfcount development.
"Assuming 75% of the Midland Wolfcamp's production stream is crude oil, PXD's base case scenario implies basin-wide oil volumes will increase by ~1.65 MMBbld over the next 10 years; for perspective, total US oil production is currently ~8 MMBbld. This massive production growth will largely rely on the industry's ability to effectively develop infrastructure in the play (gathering/processing capacity, transportation infrastructure, power, water access, etc.)," said analysts.
TheStreet Ratings team rates PIONEER NATURAL RESOURCES CO as a Hold with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:
"We rate PIONEER NATURAL RESOURCES CO (PXD) a HOLD. The primary factors that have impacted our rating are mixed - some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its robust revenue growth, solid stock price performance and increase in net income. However, as a counter to these strengths, we find that the company's return on equity has been disappointing."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The revenue growth greatly exceeded the industry average of 3.1%. Since the same quarter one year prior, revenues rose by 34.6%. Growth in the company's revenue appears to have helped boost the earnings per share.
- Powered by its strong earnings growth of 63.49% and other important driving factors, this stock has surged by 55.80% over the past year, outperforming the rise in the S&P 500 Index during the same period. Although PXD had significant growth over the past year, our hold rating indicates that we do not recommend additional investment in this stock at the current time.
- PIONEER NATURAL RESOURCES CO reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, PIONEER NATURAL RESOURCES CO swung to a loss, reporting -$3.02 versus $3.89 in the prior year. This year, the market expects an improvement in earnings ($5.54 versus -$3.02).
- The gross profit margin for PIONEER NATURAL RESOURCES CO is rather high; currently it is at 64.05%. Regardless of PXD's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, PXD's net profit margin of 11.63% compares favorably to the industry average.
- Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Oil, Gas & Consumable Fuels industry and the overall market, PIONEER NATURAL RESOURCES CO's return on equity significantly trails that of both the industry average and the S&P 500.
- You can view the full analysis from the report here: PXD Ratings Report