Oppenheimer Cuts Targets For 3 Energy Names

In a recent report outlining its outlook for 2015, Oppenheimer slashed its price targets for three of its Outperform-rated energy stocks. Oppenheimer sees a difficult environment for the sector in 2015 because of the collapse in crude oil prices and advises investors to take a defensive approach.
ONEOK Inc OKE
Analysts see low oil and natural gas prices leading to decelerating dividend and distribution growth at ONEOK. They believe that the company can still grow its dividend even if it is unable to grown its distribution per unit. Analysts remain positive on ONEOK in the long-term and maintain their Outperform rating but cut their price target from $67 to $49.
Seadrill Ltd SDRL
Analysts point out Seadrill’s strong distribution coverage through 2016, but warn of uncertainty surrounding future contract rates once current contracts start to roll over in early 2017. They believe that, despite the soft oil market, Seadrill is one of only a handful of partnerships with a compelling risk/reward balance for investors at this time. Analysts maintain their Outperform rating, but cut their price target from $38 to $21.
Regency Energy Partners LP RGP
Analysts believe that distribution growth for Regency in 2015 may be difficult. Even though Regency has relatively little exposure to commodity prices, it also has very little wiggle room on its distribution coverage in the upcoming year. Despite the tough oil environment, analysts believe that Regency is an attractive investment at current levels. They maintain their Outperform rating but cut their price target from $37 to $26.
Oppenheimer analysts note that all of their price target revisions in the report are based off their projections of $60 crude oil and $4.00 natural gas through 2016.