Investors are shrugging off the bear market in oil prices to bid shares in Santos higher after a broker described the stock’svaluation as “compelling”.
Morgan Stanley analysts upped their rating on the stock to “overweight”. They think the market is underestimating the cost-reduction programbeing pursued under the new management team led by CEO Kevin Gallagher.
It helps that the broker believes the oil price will push towards$US60/barrel by the end of 2017, even if it’s volatile in the coming months. The key catalyst for the stock, the analysts reckon, will be the company’s half-year earnings result, due August 19.
David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific’s leading geo-politics and economics portal.
He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.
