Wells Fargo (NYSE:WFC) Downgrades Oasis Petroleum (NYSE:OAS) Citing Valuation

With its strong performance since its summer IPO, Oasis Petroleum (NYSE:OAS) is looked upon as fully valued, and Wells Fargo (NYSE:WFC) was the latest to downgrade them, as the dropped them from "Outperform" to "Market Perform."

Wells said, "We are downgrading shares of OAS following substantial absolute and relative strength. With shares up 55% from the IPO, they have handily outperformed the EPX during that timeframe. With Bakken upside potential increasingly understood, execution a requisite, and oil trading toward the higher end of its recent range, we view risk reward as more consistent with a Market Perform rating. We are maintaining our estimates and valuation at this time."

UBS (NYSE:UBS) downgraded them Monday from "Buy" to "Neutral," citing similar reasons.

Oasis closed Tuesday at $20.26, losing $1.40, or 6.46 percent.

Wells has a valuation range of $21.00 to $23.00 on them.

Oasis Petroleum (NYSE:OAS) Trading Beyond Valuation?

Oasis Petroleum (NYSE:OAS) has soared since its initial public offering in Jue 2009, soaring about 60 percent since that time.

But according to UBS (NYSE:UBS), they believe the company at this time is trading at 2P valuations that are unsustainable in the short term. Consequently UBS downgraded Oasis from "Buy" to "Neutral."

UBS analyst says, "Since its June IPO, shares of OAS have rallied 60% vs. oily peers of 23%. We attribute the rapid appreciation to: 1) solid operational execution across its first set of Bakken wells; 2) increased M&A activity in the Bakken; and 3) broader confidence in Bakken resource potential. While we still view the company favourably in terms of fundamentals, we now believe the market is trading the company beyond 2P valuations and may be attempting to price in a takeout premium that we believe is unlikely to take place," said UBS.

Oasis closed Monday at $21.66, gaining $0.02, or 0.09 percent.