YPF Analysts Most Bullish in Two Years Forecasting 38% Gain

Analysts covering Argentina’s state-run energy company YPF SA are the most bullish in two years on prospects the shares will rally amid increasing earnings.

YPF’s American depositary receipts will surge 38 percent to $46.28 in the next 12 months, according to an average of 10 analysts surveyed by Bloomberg. The gap between current and projected prices is the widest since August 2012, and bigger than the forecast gain for 13 of 14 global peers, including Exxon Mobil Corp. and BP Plc.

Analysts are growing optimistic on YPF after the Buenos Aires-based company raised prices and output as it begins to develop Vaca Muerta, the world’s second-largest shale gas deposit, along with Chevron Corp. Walter Chiarvesio, who follows YPF at Banco Santander SA’s Argentine unit, says ADRs will almost double by next year.

“Among Argentina’s ADRs, YPF is the strongest,” Chiarvesio, whose $62 price target for the end of 2015 is the highest among analysts, said by telephone from Buenos Aires. “It’s generating good results on all fronts, and next year, shares should have a better performance than this year.”

YPF’s ADRs rose 1.5 percent to $33.61 today in New York trading. In Buenos Aires, the energy producer climbed 3.6 percent to 401 pesos a share.

Deutsche Bank AG yesterday started covering the company with a buy rating, while brokerage Allaria Ledesma & Cia. SA on Nov. 18 raised YPF’s local share price estimate after earnings beat estimates.

Hedge Funds

YPF, Argentina’s largest company with a market value of $13.2 billion, said this month that third-quarter net income more than doubled to 3.2 billion pesos ($375.7 million), topping analysts’ forecasts.

Speculation that a more market-friendly government will succeed President Cristina Fernandez de Kirchner after Oct. 25 elections is bolstering bets on the country’s assets. The incumbent expropriated a 51 percent stake in YPF from Spain’s Repsol SA in 2012 for allegedly failing to invest amid declining output.

Billionaire fund-managers George Soros, Daniel Loeb and Richard Perry cut their stakes in YPF in the third quarter.

Soros Fund Management LLC sold about $17 million of YPF ADRs to take a 3.4 percent stake in the company as of Sept. 30, according to a Nov. 14 filing. Loeb’s Third Point LLC reduced its holding by 2.5 million shares, or $92.5 million, to a less than 1 percent stake. Perry Capital LLC said Nov. 13 it sold some of its YPF shares in the period, leaving it with a 1.2 percent holding.

YPF remains Soros’s largest position and has become a widely held security among hedge funds betting on an investment boom once Argentina settles with creditors from its 2001 default. Kyle Bass’s Hayman Capital Management LP bought a $79.2 million stake in the third quarter on speculation the energy company will be the main beneficiary of capital inflows when the legal dispute is resolved, he said last week.

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