Why Heckmann's Shares Dropped

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of service provider Heckmann fell as much as 10% today, after being downgraded by an analyst.

So what: Jefferies & Co. downgraded the stock to a hold from a buy rating, and dropped its price target to $4.50 from $5.50. The analysts think demand will be down in the first half of 2013, which is because of low rig counts in gas drilling. This follows a downgrade to underperform at Wedbush Securities last week.  


Now what: The sentiment toward service providers, particularly in gas, is diminishing as activity slows. This is a long downshift in demand that is the result of oversupply and low prices for natural gas. I don't see a reason to buy now, at least until we can export natural gas to high cost markets.

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The article Why Heckmann's Shares Dropped originally appeared on Fool.com.

Fool contributor Travis Hoium has no position in any stocks mentioned. You can follow Travis on Twitter at @FlushDrawFool, check out his personal stock holdings or follow his CAPS picks at TMFFlushDraw The Motley Fool owns shares of Heckmann and has the following options: Long Jan 2014 $4 Calls on Heckmann and Short Jan 2014 $3 Puts on Heckmann. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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