While Hess Should Trade at a Premium to Upstream Peers, the Market Has Gone Way too Far

We're raising our fair value for Hess to $93 from $88 after taking a second look at the firm's fourth-quarter financial results. But even after this increase, shares are looking extraordinarily expensive at the current level. Energy stocks have surged ahead of the broader market since the recovery from COVID-19 began in earnest at the start of 2021, and Hess has been one of the sector's strongest performers in that period (advancing roughly 27%). But we believe the rally is long overdone. Since 2020, the stock has catapulted from a 5-star rating to a 1-star rating, which is where it remains today.