Bull Note Sends Oil Stock Soaring

The equity is up 53% for the quarter

Fernanda Horner
Jun 19, 2020 at 10:47 AM
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The shares of oil and gas producer EOG Resources Inc (NYSE: EOG) are up 3.9% at $55.02 this morning, after SunTrust Robinson added EOG to its analyst focus list. The analyst in coverage also upgraded the stock to "buy" from "hold," and hiked its price target to $70 from $50, territory not seen since late February. The brokerage attributed the upgrade to EOG's flexing of operations and finances, as well as budget cuts and production curtailments in response to a drop in oil prices.

On the charts, EOG has been steadily climbing out of its mid-March 11-year lows near the $27 level. Although the shares are up 53% for the quarter, a rally earlier in the month was stopped short of their 160-day moving average. Longer term, the equity is down 34.4%

Analysts were optimistic toward EOG coming into today, with 11 of the 18 in coverage sporting a "buy" or better, and the remaining seven carrying a "hold." Meanwhile, the 12-month consensus target price of $61.74 is a 11.81% premium to current levels. 

That sentiment is echoed in the options pits, where the appetite for calls is unusually high. In the last 10 days, 5.84 calls were bought for every put at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX). This ratio sits higher than 92% of readings from the past year, meaning calls are being picked up at a faster-than-usual pace. 

What's more, EOG Resources stock's Schaeffer's Volatility Scorecard (SVS) sits high at 89 out of 100, showing that the stock has tended to exceed option traders' volatility expectations during the past year, a good thing for option buyers.


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