NEW YORK (TheStreet) -- Shares of oil and natural gas exploration company SandRidge Energy (SD) closed down 7.84% to $2.47 on Tuesday after Bank of America/Merrill Lynch downgraded the energy sector to "market weight."
The firm made the move after OPEC decided last week not to cut oil production and to keep its target at 30 million barrels per day, a move that could leave the market oversupplied. The announcement sent oil prices spiraling downward.
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"With the collapse in crude, the sector now trades at a 20% discount to the S&P 500, where it has historically traded in-line with the market, but further estimate cuts are likely to come, [as] prices are falling faster than earnings are deteriorating," the firm said.
Separately, TheStreet Ratings team rates SANDRIDGE ENERGY INC as a "hold" with a ratings score of C-. TheStreet Ratings Team has this to say about their recommendation:
"We rate SANDRIDGE ENERGY INC (SD) 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 expanding profit margins and notable return on equity. However, as a counter to these strengths, we also find weaknesses including unimpressive growth in net income, weak operating cash flow and generally higher debt management risk."