The News Corp press is reporting that oil and LNG giant Santos Ltd (ASX: STO) has been downgraded to underperform by top broker Credit Suisse after its share price gained 17% in the past year and 84% over the past two years.
Driving Santos' success has been rising oil and energy prices alongside management being able to fix a balance sheet that was previously drowning in debt.
For the full year ending December 31 2019 Santos posted a record underlying profit of US$727 million on revenue of US$3,660 million with US$9.7 cents per share paid to shareholders out over the year.
It also completed the US$2.15 billion purchase of Quadrant Energy Ltd from capital markets wheeler and dealer Macquarie Group Ltd (ASX: MQG).
Net debt has also been reduced to US$3,559 million, which is high, but not compared to the US$6,128 million level of 2014 that came about due to the decision to invest eye-watering amounts of capital into developing its Gladstone LNG project prior to energy prices tumbling in 2015.
Santos looks a turnaround story assuming oil prices remain elevated and its balance sheet focus is retained.
However, I'm not a buyer of Santos shares for a number of reasons and would tend to agree with Credit Suisse's verdict on it from here.
