Benzinga - Oil and gas producer Hess Corp. (NYSE: HES) has been a multi-year winner, delivering investors more than 228% returns in the last five years, against the S&P 500 (ARCA: SPY), which has delivered 47.56% in that same time frame.
That is why analysts at Goldman Sachs downgraded the stock on Friday.
The HES Analyst: Goldman’s Neil Mehta downgraded Hess from a Buy to a Neutral rating, but raised the price target from $161 to $170.
“We remain positive on Guyana resource base with potential for further additions to the resource base through exploration/appraisal, and attractive growth through additional developments,” Mehta said in a note to investors Friday.
The note cites Liza Phases 1 and 2 as reasons for the company's strong performance over the past year, with shares returning +417% since Goldman added the stock to its Buy list on March 16, 2020.
The note also states that the Hess downgrade is a reflection of Goldman’s valuation, as the stock's outperformance on a multi-year basis gives it a less-than-favorable upside potential from current levels.
“We emphasize the downgrade is more a reflection of valuation, with our constructive view on Guyana as very much intact and Hess still delivering the best growth story in global Energy on a multi-year basis," the analyst explained.
Goldman prefers other Buy rated energy stocks including Exxon Mobil Corp (NYSE: XOM), which has exposure to Guyana, ConocoPhillips (NYSE: COP) given a relative valuation, and Suncor Energy Inc. (NYSE: SU) for higher through-cycle free cash flow generation despite lower growth.
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Latest Ratings for HES
| Mar 2022 | Wells Fargo | Maintains | Overweight | |
| Jan 2022 | Credit Suisse | Maintains | Neutral | |
| Jan 2022 | Morgan Stanley | Maintains | Overweight |
View the Latest Analyst Ratings
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