Resolute Energy Corp (NYSE: REN)
Resolute Energy is having yet another incredible trading session in the market today, following up on the gains that we’ve seen over the past month. As a result, there’s a big question popping up. Can the stock continue to grow? Today, we’ll take a look at analyst opinions as well as current market conditions. At the end, I’ll let you know my opinion with regard to this bull run on REN.
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Analysts Are Nowhere Near As Bullish On REN As Investors
I never advise anyone to jump on analyst opinions without doing your own research. However, they are a great starting point to see what you can expect when you dig deeper into the stock and market conditions surrounding it. In the case of Resolute Energy, analysts are overwhelmingly bearish.
- NASDAQ – According to NASDAQ, there are 5 analysts currently weighing in on the stock. Three of these analysts rate it a hold while two rate it a strong buy. When it comes to price targets, however, we start to see the bearish opinions come to life. According to NASDAQ, the median price target on REN is just $11 per share!
- WSJ – The Wall Street Journal also reports relatively bearish analyst opinions. According to the outlet, out of 6 analysts, 3 rate the stock a buy while 3 rate it a hold. Again, the bearish opinion becomes clear when we look at price targets. Currently, the WSJ median price target on Resolute Energy is $13.75. While it’s a bit better, it still shows a drastic decline from today’s levels.
What About Market Conditions
Resolute energy is a company that is heavily focused on the production of oil. As a result, the company is incredibly exposed to spot market prices and risks associated with oil and the energy industry as a whole. Unfortunately, this industry isn’t doing well at the moment, as we all know. Currently, oil companies are working toward a larger market share, increasing production each step of the way and adding to the supply glut. This, in combination with the idea that the Fed could raise its interest rate this month and poor economic conditions around the world are likely to continue weighing on demand, is horrible for the oil market. As a result, things aren’t looking good for the industry that REN does business in.
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The Bottom Line
The bottom line here is that while recent gains in REN have been incredibly fun to watch, the data suggests that the upward movement will prove to be short term. At the end of the day, Resolute Energy relies on the oil spot price, and there is quite a bit of uncertainty. At the moment, and for some time now, the company has been struggling with low oil prices. Considering that these low prices are likely to fall further thanks to increasing production and decreasing demand, REN has a tough road ahead. All in all, I’m expecting for the stock to fall off of recent highs relatively soon.
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