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Yesterday, Bank of America Merrill Lynch decided to up its rating on Anadarko Petroleum (NYSE: APC) to "buy" from "neutral" and raised the company's price target to $57 per share from $52 per share. The main reason for the upgrade was the company's success in raising $1.3 billion in a stock offering.
In my opinion, this is a rather bold move, mainly based on the target price for the stock. Perhaps the company does have a solid balance sheet, but it also faces some rather staunch resistance. The stock is hovering in the $41 region and is positioned beneath its 10-, 20-, and 50-unit weekly and monthly moving averages.
Should the stock garner enough momentum to break through these trendlines, it will have to contend with the $50 level. The shares have been turned away in this region twice in the past nine weeks and could post a major hurdle to Bank of America's perceived price.
Furthermore, I am not sure that the problems in the oil patch will allow APC's stock price to achieve the lofty heights set by Bank of America. I'm not saying that the stock price will never get there, but it may take some time, especially since the stock is going to have to break through quite a bit of resistance to get to where some believe it should be.
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