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On Thursday, JPMorgan analysts adjusted their stance on CNOOC (NYSE:CEO) Ltd. (883:HK) (NYSE: CEO), downgrading the company’s stock rating from Overweight to Underweight. Accompanying this change, the price target was also revised downward to HK$13.50 from the previous HK$22.00. The stock, currently trading near its 52-week low with a market capitalization of $256 million, is fairly valued according to InvestingPro analysis.
The downgrade follows CNOOC’s first-quarter 2025 net profit of Rmb36.6 billion, marking an 8% year-over-year decline. This figure only constituted 27% of the consensus full-year 2025 net profit forecast. Despite a 1% year-over-year increase in gas average selling price (ASP) and a 5% rise in volume growth, these factors were insufficient to counterbalance an 8% decrease in oil ASP year-over-year. The company’s revenue has declined 6.14% over the last twelve months, with a P/E ratio of 34.92x and an overall Financial Health score of "FAIR" according to InvestingPro metrics.
JPMorgan’s negative outlook on CNOOC is part of a broader shift that began in the fourth quarter of 2024 when the firm downgraded oil as an asset class. Additionally, in February 2025, JPMorgan turned bearish on spot liquefied natural gas (LNG). Post-results, JPMorgan has also reduced its 2026 earnings per share (EPS) estimate for CNOOC by 21% to align with a projected $60 per barrel Brent crude price, which is notably 21% below the consensus.
In contrast to the downgrade of CNOOC, JPMorgan maintains an Overweight rating on PetroChina, citing its greater leverage to China’s gas market and its successful decoupling from oil prices since 2022. This selective approach within the China energy sector reflects JPMorgan’s strategy as it navigates a potentially weaker oil and macroeconomic environment. For deeper insights into energy sector valuations and exclusive financial metrics, access over 30 additional key indicators with InvestingPro.
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