Anadarko Petroleum Corporation (APC) — Shares of energy companies, including APC stock, rallied Friday after oil prices hit their highest level year to date. The gains were spurred by an International Energy Agency (IEA) report that said crude may have finally bottomed.
Adding to optimism in the energy sector Friday was a positive research note by Goldman Sachs, which The Wall Street Journal notes has had one of the most bearish outlooks since the rout in oil prices began. Goldman said supplies could ease this year and that decreased production should lead to higher prices in 2017.
Its analysts also said they expect $55 to $60 oil to jumpstart shale oil production, which led them to upgrade APC stock to “Buy.”
Other firms have also been positive on Anadarko, one of the largest independent exploration and production companies in the world, recently. For example, in early February, Credit Suisse Equity Research reiterated its “Outperform” rating on APC stock and set a target price of $55, saying Anadarko has the strength to weather the current downcycle.
Turning to the chart, APC stock managed to recover when it broke below the support line of its bear channel early this year.
Recently, shares broke above the 50-day moving average at $40 on high levels of accumulation. Then, on Friday, APC gapped up and closed 8.9% higher on the renewed optimism in the sector and upgrade by Goldman.
APC stock appears to be a good candidate for a trade from $47 to $58, which would result in a gain of more than 20%.
However, if crude has indeed bottomed like the IEA suggests, shares could go much higher. For instance, Bentek Energy forecasts WTI oil prices will average $42 per barrel in 2016 and $53 per barrel in 2017. This would have a substantial impact on Anadarko’s income. Therefore, long-term investors should also consider buying shares of this well-managed company. Keep in mind that APC stock hit a high above $113 in August 2014.
