NEW BEARISH Plays
Murphy Oil - MUR - close: 41.42 change: -0.80
Stop Loss: 43.05
Target(s): To Be Determined
Current Gain/Loss: Unopened
Entry on June -- at $---.--
Listed on June 29, 2015
Time Frame: Exit PRIOR to MUR earnings in very late July
Average Daily Volume = 1.9 million
New Positions: Yes, see below
The crash in crude oil prices in the second half of 2014 was pivotal turning point for the U.S. energy industry. Suddenly the booming oil and gas sector had its future being question with the price of oil now unprofitable for many drillers. Oil has managed a bounce from its 2015 lows while many of the oil and gas producers are still seeing their stocks decline.
MUR is in the basic materials sector. According to the company,
"Murphy Oil Corporation is an independent exploration and production company with a strong, oil-weighted portfolio of global offshore and onshore assets. Exploration activities are focused in four main regions: Deepwater Gulf of Mexico, the Atlantic Margin, Southeast Asia and Australia."
The company reduced its 2015 capex outlook by -33% when they reported their 2014 Q4 results back in January. MUR's Q1 results came out in May. Profits evaporated with MUR delivering a loss of ($1.11) per shares versus a profit of $0.96 a year ago.
Management is trying to prop up their floundering stock price. On May 20th the company announced an accelerated stock buy back program of $250 million. This is part of a previously announced $500 million repurchase program from August 2014. The buy back doesn't seem to be working.
Goldman Sachs downgraded MUR to a "sell" in late May. Nearly a month later UBS has also downgraded MUR to a "sell". The UBS analyst expressed concern that MUR's production would likely decline in 2015 and 2016 since the company has cut back on investment.
The stock's attempt at an oversold bounce failed near $44 a couple of weeks ago and now shares are breaking down to new multi-year lows. The point & figure chart is bearish and forecasting at $34.00 target.
Tonight we are suggesting a trigger to open bearish positions at $41.15.
Trigger @ $41.15
- Suggested Positions -
Short MUR stock @ $41.15
- (or for more adventurous traders, try this option) -
Buy the AUG $40 PUT (MUR150821P40) current ask $1.30
option price is a current quote and not a suggested entry price.
Entry disclaimer: To avoid an unfavorable entry point, we will not launch a new play if the stock gaps open more than $1.00 past our suggested entry point.
Option Format: symbol-year-month-day-call-strike