Deutsche Bank Downgrades Hess To 'Hold', Cuts Price Target To $62
Thursday, January 26, 2022 2:24 PM

Deutsche Bank (DB) has downgraded its rating on energy company Hess Corp. (NYSE: HES) to "Hold" from "Buy" and cut price target to $62 from $68.

Paul Sankey, an analyst at DB, said his December 12th BUY case on Hess was part of a buy case for oil price levered stocks.

"With Hess now oil hedged to protect its very aggressive 2012 capex programme, and with 0%-5% growth target weak after last year’s 11% decline, we cut to HOLD," he wrote.

"The issue we now face is that we are cutting Hess after almost a year of poor newsflow and under-performance," Sankey said.

"We had a specific reason for upgrading Hess, namely upside leverage to oil prices, that has now been diluted by the company’s need to hedge some 40% of volumes at $108/bbl Brent in order to protect its extremely high 2012 capex outflow of $6.8bn vs its cashflow of $5bn even at estimated oil prices of $115/bbl for 2012. And within that spend, the lower end of Hess’s growth target is 0%," Sankey added.

On Thursday, the stock, which has been trading between $46.66 and $87.40 over the past year, fell 3.2% to $55.43.