Energy Sector at $80/bbl Oil - Looking Forward to Earnings Upgrades
Russian oil and gas stocks have so far completely missed Brent's move from $70/bbl to $80/bbl. It may be easy to claim that the sector's underperformance relative to crude has been caused by negative geopolitical news flow and sanction risks. However, the underperformance is not only the result of a rising risk premium, in our view. Rather, the data show that the consensus has failed to price higher oil into models. Consensus estimates instead imply an assumption of $60/bbl oil. Should oil prices stay at the current levels, we would expect to see a wave of upward earnings revisions, which would support the sector.
Sberbank CIB Investment Research is a research firm offering equity, fixed income, economics, and strategy research. It covers analysis on all aspects of Russia’s capital markets, issues and industries. The firm analyzes trends in Russia and combines local knowledge with a global perspective. It processes macroeconomic data, market and company-specific news, stock quotes and other information for providing research reports. The firm provides details and latest prices on the most traded names and most traded paper on all segments Russian market. In strategy research, it provides thematic research, tips and descriptions of the methodology used to evaluate companies.
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