Monday, May 9, 2011

Brigham Exploration Company (NASDAQ: BEXP) Q3 2011 Price Target

Recent price: 28.59$
P/E Ratio: 103.43
3 Months Target Price: 34$

Company Description
Data provided by Reuters tells us that Brigham Exploration Company is an independent exploration, development and production company that utilizes advanced exploration, drilling and completion technologies to systematically explore for, develop and produce domestic onshore oil and natural gas reserves. The Company’s exploration and development activities are focused in the Rocky Mountains, Onshore Gulf Coast, the Anadarko Basin and West Texas. During the year ended December 31, 2009, the Company drilled, completed 57 gross wells, consisting of two exploratory wells and 55 development wells with an average completion rate of 98%. The natural gas is sold to various purchasers, including intrastate pipeline purchasers, operators of processing plants, and marketing companies under both monthly spot market contracts and multi-year arrangements.

Confidence Margins
Strong resistance $37.87 (+32%)
Light resistance $34.45 (+20%)
Light support $28.07 (-2%)
Strong support $24.45 (-14%)

Brigham Exploration Company disappointed investors on May 4th when the company issued a statement providing guidance for the second quarter of 2011 that came short of what analysts were expecting. This sent the shares down and provided investors with a good entry point for a long term position in the company that will pay a bundle.

Entry strategy
For the cautious investor:
Buy the stock for 29.50$ or less.

For the risk-taking trader:
The October 2011 30$ out-of-the-money call option contract seems to be the right position to take, they can be acquired for about 370$ per contract.

Exit Strategy
For the cautious investor:
Sell when the stock reaches 34$, or keep it until 37$ if you are more bullish in your own analysis.

For the risk-taking trader:
The contracts should be kept until the underlying reaches around 34$. This should provide a satisfactory return if the underlying reaches the target price as the contracts will get in the money.

No comments:

Post a Comment