< The 2015 All-America Research Team
William Featherston
UBS
First-Place Appearances: 0
Total appearances: 13
Analyst debut: 2003
In second place for a third consecutive year is William Featherston, who impresses clients with his “useful weekly valuation snapshots and oil data updates,” in the words of one money manager. After what has clearly been a rough year for oil prices — Brent crude plummeted from $96.82 per barrel 12 months ago to $47.28 in mid-September — the UBS analyst estimates that 2016 will see oversupply of a million barrels a day, and more if sanctions on Iran are lifted. As a result, he says, “we think the market is slowly starting to price in that oil prices will be lower for longer. The market is sending a signal to non-OPEC producers to reduce investment, to slow or reduce growth to bring the market back into balance.” On the stock valuation front, he deems U.S. oil and gas exploration and production names expensive. Despite the group’s 50.4 percent decline over the year through mid-September, compared with the broad market’s 2.6 percent loss, the shares remain dear, the researcher contends, because they are discounting a recovery to $70 oil and the futures curve indicates that prices are not expected to surpass $61 or $62 even a few years out. Given this picture, Featherston, 47, reports that he has been issuing fewer buy ratings than in the recent past, and “the names that we do recommend tend to have strong balance sheets or hedges to protect them from near-term challenges — and a lot of exposure to shale.” Two Woodlands, Texas, providers are among that group: Anadarko Petroleum Corp., his large-cap favorite; and Newfield Exploration Co., his preferred midcap company. Also getting the nod is Pioneer Natural Resources Co. of Irving, Texas, because it’s a play on the Permian Basin in the Southwest, which Featherston considers “the biggest shale opportunity in the U.S. over the longer term.” The stock closed at $121.87 in mid-September, and he forecasts a rise to $180.