Analysts are weighing in on sports-equipment maker Performance Sports Group Ltd (NYSE:PSG) and oil and natural gas firm Bonanza Creek Energy Inc (NYSE:BCEI), as shares of both companies fell sharply today. Let’s take a closer look.
Performance Sports Group Ltd
Shares of Performance Sports are collapsing, down 63% at time of writing, after the company revised its outlook and provided weak preliminary results for fiscal third-quarter. In reaction, Sterne Agee CRT analyst Lee Giordano slashed the price target to $6.00 (from $12.00), while reiterating a Buy rating on the stock.
Giordano wrote, “We were surprised to see such a big reduction in F2016 guidance given that management just provided an update on 1/13/16. The lack of near-term visibility prompts caution and could limit upside for now; however, some of the weakness is likely transitory (i.e., The Sports Authority bankruptcy impact). In addition, management will likely need time to regain the confidence of investors. While patience will be required, we remain positive on PSG’s LT growth opportunity and its leading branded platform.”
According to TipRanks.com, which measures analysts’ and bloggers’ success rate based on how their calls perform, analyst Lee Giordano has a total average return of -3% and a 50% success rate. Giordano has a -26% average return when recommending PSG, and is ranked #3049 out of 3698 analysts.
Out of the 5 analysts polled by TipRanks (in the past 3 months), 4 rate Performance Sports stock a Buy, while 1 rates the stock a Hold. With a return potential of 210%, the stock’s consensus target price stands at $9.60.
Bonanza Creek Energy Inc
Credit Suisse analyst Mark Lear downgraded shares of Bonanza Creek from Outperform to Neutral, while slashing the price target to $2.00 (from $4.00), as he sees the business challenged due to the termination of the Rocky Mountain Infrastructure agreement. In reaction, shares of Bonanza Creek are falling nearly 25%.
Lear commented, “BCEI noted that its previously contemplated RMI sale to Meritage Midstream was terminated with the company planning to remarket these assets as well as its Mid-continent assets in 2016. While the company noted that it would have some visibility on when these deals would be executed by 2Q16, in the absence of a definitive agreement we see its balance sheet and ability to accrete NAV stretched in the current environment.”
Furthermore, “BCEI did not provide an outlook for 2016, opting instead to give guidance only for 1Q16. The company intends to run one rig in the DJ Basin in the first quarter after which it anticipates dropping this rig. Consequently, capex is expected to be front-end loaded for the year, with 1Q guidance of $35 – 40MM. The company’s production guidance for 1Q implies a 17% sequential decline at the midpoint and while it has plans to optimize base declines, we anticipate that production will decline 25% yr/yr as the company lays down its final rig.”
According to TipRanks.com, which measures analysts’ and bloggers’ success rate based on how their calls perform, analyst Mark Lear has a total average return of 24.5% and a 48% success rate. Lear is ranked #300 out of 3698 analysts.
Out of the 9 analysts polled by TipRanks, 1 rates Bonanza Creek stock a Buy, 7 rate the stock a Hold and 1 recommends to Sell. With a return potential of 5%, the stock’s consensus target price stands at $2.33