Pioneer Energy (PES) Stock Downgraded at Wells Fargo

NEW YORK (TheStreet) -- Pioneer Energy Services (PES) stock was downgraded to "market perform" from "outperform" at Wells Fargo this morning.

The firm lowered Pioneer Energy's price target to a range of $3.00-$4.50 from a range of $7.00-$9.50, according to TheFlyontheWall.com.

Wells Fargo believes that the global oil market will continue to be weak into 2016 and downgraded its rating for the land drilling sector to "market weight" from "overweight."

Shares of Pioneer Energy were down 9.37% to $3.00 in early morning trading on Tuesday, as oil prices reversed gains from the previous session.

Oil prices were down on Tuesday morning due to data showing that China's manufacturing slowed, according to Reuters.

Crude oil (WTI) was down 4.82% to $46.83 per barrel this morning, and Brent crude was down 5.08% to $51.40 per barrel, according to the CNBC.com index.

Separately, TheStreet Ratings team rates PIONEER ENERGY SERVICES CORP as a Sell with a ratings score of D. TheStreet Ratings Team has this to say about their recommendation:

"We rate PIONEER ENERGY SERVICES CORP (PES) a SELL. 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, disappointing return on equity and generally disappointing historical performance in the stock itself."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • PIONEER ENERGY SERVICES CORP has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. Earnings per share have declined over the last two years. We anticipate that this should continue in the coming year. During the past fiscal year, PIONEER ENERGY SERVICES CORP reported poor results of -$0.61 versus -$0.58 in the prior year. For the next year, the market is expecting a contraction of 27.9% in earnings (-$0.78 versus -$0.61).
  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Energy Equipment & Services industry. The net income has significantly decreased by 24126.0% when compared to the same quarter one year ago, falling from -$0.32 million to -$77.28 million.
  • 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 Energy Equipment & Services industry and the overall market, PIONEER ENERGY SERVICES CORP's return on equity significantly trails that of both the industry average and the S&P 500.
  • Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 80.68%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 11900.00% compared to the year-earlier quarter. Naturally, the overall market trend is bound to be a significant factor. However, in one sense, the stock's sharp decline last year is a positive for future investors, making it cheaper (in proportion to its earnings over the past year) than most other stocks in its industry. But due to other concerns, we feel the stock is still not a good buy right now.
  • PES, with its decline in revenue, underperformed when compared the industry average of 22.4%. Since the same quarter one year prior, revenues fell by 48.0%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • You can view the full analysis from the report here: PES Ratings Report

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