Oil prices surged on Monday and posted its largest monthly gain in a year on a supply shortage and political tensions in the Middle East and Eastern Europe. For April delivery, the most-active Brent contract rose 0.8% to settle at $89.26 per barrel, while the U.S. West Texas Intermediate crude advanced 1.5%, to close at $88.15 per barrel.
However, consumers and policymakers are growing anxious about the high oil prices, and there’s a feeling that policy makers might act faster and more aggressively to bring them under control. Major oil-importing nations could again begin haranguing OPEC+ to boost supply further.
Indeed, the U.S. Energy Information Administration (EIA) has forecasted crude oil prices to decline from their 2021 levels because inventories are expected to increase in 2022 and 2023. Given this backdrop, Wall Street analysts are bearish on the oil and gas stocks CrossAmerica Partners LP (CAPL), Tidewater Inc. (TDW), and NGL Energy Partners LP (NGL).
CrossAmerica Partners LP (CAPL)
CAPL in Allentown, Pa., operates as a wholesale distributor of motor fuels, a convenience store operator, and owns and leases real estate used for the retail distribution of motor fuels. The company operates through the two broad segments of Wholesale and Retail.
For its fiscal third quarter, ended Sept. 30, CAPL’s operating income decreased 46.9% year-over-year to $12.59 million. Its net income and earnings per common unit came in at $8.85 million and $0.23, respectively, down 58.3% and 58.9% from the prior-year period.
The $0.49 consensus EPS estimate for its fiscal 2021 indicates an 82.9% year-over-year decrease.
The stock has declined 0.2% in price over the past three months and 0.4% intra-day to close yesterday’s trading session at $22.31.
The sole Wall Street analyst rating CAPL has rated it as Sell. The 12-month median price target of $15.00 indicates a 32.8% potential downside.
Tidewater Inc. (TDW)
TDW in New Orleans, La., operates as an offshore marine support and transportation services provider to the offshore energy industry by operating a fleet of marine service vessels. The company offers services to support offshore oil and natural gas exploration, field development, and production.
On November 16, TDW closed a $175 million offering of 8.5% senior secured bonds due 2026. TDW used the net proceeds from the issue to refinance outstanding debt.
For the nine months ended September 30, TDW’s net cash used in financing activities increased 19.7% year-over-year to $40.97 million. Its cash, cash equivalent, and restricted cash balance stood at $153.70 million, down 30.8% from the prior-year period.
The Street’s negative $2.77 EPS estimate for fiscal 2021indicates a 69.9% year-over-year decrease. And the Street’s $360.30 million revenue estimate for the same year reflects a 9.3% decrease from the prior year. Moreover, TDW has missed consensus EPS estimates in three out of the trailing four quarters.
TDW’s shares have declined 8.5% in price intraday to close yesterday’s trading session at $14.19.
The sole Wall Street analyst rating TDW has rated it Hold. The 12-month median price target of $12.00 indicates a 15.4% potential downside.
NGL Energy Partners LP (NGL)
NGL is a diversified midstream MLP that provides multiple services to producers and end-users, including transportation, storage, blending and marketing of crude oil, NGLs, refined products, and water solutions. NGL is headquartered in Tulsa, Okla.
NGL’s total cost of sales increased 58.1% year-over-year to $1.53 billion in its fiscal second quarter, ended September 30. Its net income declined 120.7% from the prior-year quarter to a negative $1.21 million, while net loss per common unit rose 50% from the same period from the prior year to $0.21.
Analysts expect NGL’s EPS to come in at a negative $1.41 for its fiscal year 2022. In addition, NGL has missed consensus EPS estimates in each of the trailing four quarters.
Over the past year, the stock has declined 19.7% in price to close yesterday’s trading session at $2.20. It has declined 4.3% in price over the past three months.
The sole Wall Street analyst rating NGL has rated it as Sell. The 12-month median price target of $1.75 indicates a 20.5% potential downside.
CAPL shares were trading at $22.48 per share on Tuesday afternoon, up $0.17 (+0.76%). Year-to-date, CAPL has gained 17.94%, versus a -5.20% rise in the benchmark S&P 500 index during the same period.
About the Author: Anushka Dutta
Anushka is an analyst whose interest in understanding the impact of broader economic changes on financial markets motivated her to pursue a career in investment research.
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