Natural Gas Stock Could Feel More Pain

The average analyst price target looks way too high on PXD stock

Pioneer Natural Resources (NYSE:PXD) has been in a long-term downtrend since peaking above $210 in May. While the security has bounced from its late-December lows, it's run into a potential wall in the form of its 80-day moving average, which could smack PXD even lower. On the fundamental front, the company is in a transition period, with its CEO recently announcing his retirement. We believe now is an opportune time to speculate on the next leg lower for the shares.

Despite the stock's decline over the past several months, analysts remain overly optimistic. PXD boasts a whopping 29 "strong buy" endorsements, compared to just two "holds" and not a single "sell" rating. Likewise, the consensus 12-month price target of $199.95 represents a 38% premium to current levels. As such, PXD is vulnerable to analyst downgrades and price-target cuts, which could further weigh on the shares.

Options traders also remain bullishly biased. The stock's 10-day call/put volume ratio on the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) is 1.58, in the 77th percentile of its annual range. Likewise, the equity's Schaeffer's put/call open interest ratio (SOIR) of 0.74 is in the bottom third of its annual range, suggesting near-term call open interest is more prevalent than usual. Since 2018, PXD SOIRs below 1.0 have preceded downturns for the shares, and an exodus of option bulls could be on the horizon again.

Finally, PXD sports a Schaeffer's Volatility Index (SVI) of 31% -- higher than just 20% of all other readings from the past year, suggesting near-term options are attractively priced right now.