Now that many of the nation’s biggest energy producers have reported first-quarter results, analysts are reevaluating their ratings and price targets on sector’s stocks.

The rebalancing of the crude oil market is taking longer than many expected, following the production cuts of 1.8 million barrels a day announced by OPEC and 11 other producing countries last November. OPEC meets later this month and is expected to agree to extend the production cutbacks through the end of this year.

Merrill Lynch continues to position for the long term while revisiting relative value for a slower oil recovery. The firm’s Doug Leggate and his team of analysts have made several key upgrades and downgrades in the energy sector.

The firm also has lowered the expected midyear peak in (Brent) oil prices from $70 to $60, recognizing disappointing inventory draws and renewed technical weakness that pulled oil below key support levels in recent weeks. The firm noted:

In a more significant change, our commodity team extends the pace of any medium term recovery with 2018 estimates dropped to levels that imply oil is range bound in the $50’s for the next two years. Incorporating this change as our base case, scenarios for the timeline of any commodity recovery are conservatively reset leaving the balance of risk skewed to a better outcome ahead of OPEC’s meeting on May 25th.

Here are some of Merrill Lynch’s comments on several firms, along with rating changes and price objectives.

Exxon Mobil Corp. (NYSE: XOM) was raised from Neutral to Buy with a price objective of $100. The analysts said:

Exxon Mobil has absolute and relative value, [and] its dividend is fully covered with capex and dividend cash coverage trending towards a $40 per barrel break-even by the end of the decade.

Noble Energy Inc. (NYSE: NBL) also was raised from Neutral to Buy, with a price objective decrease from $53 to $49 a share based on a dropdown of assets to the company’s midstream master limited partnership (MLP). The analysts noted:

We expect [Noble Energy]’s share price to start to reflect more value for Leviathan [gas field offshore of Israel] as the market begins to anticipate the startup of Phase 1 of the Eastern Mediterranean by the end of 2019. … In the Permian, we see [Noble Energy] as poised to potentially raise its 2018 growth outlook given recent Wolfcamp A results which are trending 35% above its 1.2 [million barrel of oil equivalent] type curve … .

Cabot Oil & Gas Corp. (NYSE: COG) was raised from Underperform to Neutral and the price target was raised from $25 to $28. The analysts wrote:

We upgrade COG to Neutral from Underperform primarily on an improved outlook for takeaway capacity following the receipt of FERC approval for Atlantic Sunrise, which has since underpinned relative outperformance versus peers.

Chesapeake Energy Corp. (NYSE: CHK) was downgraded from Neutral to Underperform and the price objective was lowered from $10 to $8. The analysts noted:

We rate CHK Underperform due to the unfavorable impact of a slower oil recovery. While the company has made significant strides in reducing costs and improving its balance sheet, the company is highly leveraged at weak oil and gas prices.

ConocoPhillips (NYSE: COP) was downgraded from Buy to Neutral and the price objective was lowered from $68 to $67. Merrill Lynch commented:

In absolute terms, we view COP with modest downside if current oil prices persist – and outsize leverage to a rebound under our base case, However, should the commodity remain range bound we expect the share price to stagnate versus higher growth names …

Marathon Oil Corp. (NYSE: MRO) was downgraded from Buy to Neutral with a price objective of $22. The analysts wrote:

We have a Neutral on [Marathon] due to lesser tailwind from oil prices to support its relative performance outlook while taking a pause while disclosure around recent acquisition improves. [Marathon] has done much to reposition its portfolio, shedding exploration, and narrowing the scope of operations to the US onshore 48 in 4 primary basins. However, management is now burdened with delivery.

Oasis Petroleum Inc. (NYSE: OAS) was downgraded from Buy to Neutral with a price objective of $16. The analysts noted:

While we view the company’s recently announced plan to IPO a part of its midstream assets positively along with operational momentum, OAS is highly leveraged to oil price with oil accounting for 78% of total production in 1Q17 … and given our upgraded price deck, the current target growth rate of 15%-16% could prove aggressive, further disappointing investors.

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