Credit Suisse Analyst Cool on Smaller Oil Stocks (CRZO, KOG, WLL)

The analyst has cut his ratings on three firms this morning: Carrizo Oil & Gas Inc. (NASDAQ: CRZO), Kodiak Oil & Gas Corp. (NYSE: KOG) and Whiting Petroleum Corp. (NYSE: WLL). And each cut came for a different reason.

Carrizo was cut from Neutral to Underperform because the firm’s leverage is too high to be overcome in terms of creating long-term value. The current price of the stock is around $22, and Credit Suisse has lowered its price target on the shares to $20. The consensus target is slightly more than $30, and today’s change is lower than the bottom of the range from 16 brokers.

Kodiak was cut from Outperform to Neutral, even though Credit Suisse thinks the firm is well-positioned to create long-term value for shareholders. The stock’s share price is being propped up by the company’s frequent mention as a takeover target. The price target for Kodiak has been lowered from $12 to $10, and the current price is about $9.30. The consensus target price is around $11.30 from 18 brokers.

Whiting was also cut from Outperform to Neutral on the basis of “the exhaustion of the company’s high-return inventory in Sanish [in the Bakken play] and future growth being driven by projects with diminishing returns.” Credit Suisse cut its target price from $55 to $52, well below the consensus target price of around $59.40 from 33 brokers.