Why Laredo Petroleum (LPI) Is Gaining on Wednesday
NEW YORK ( TheStreet) -- Laredo Petroleum
The firm upgraded the oil and gas explorer to "buy" from "neutral" and upped its price target to $36 from $29.
SunTrust said the ratings revision was based on a valuation call as well as several influencing factors such as lower well estimates.
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Separately, TheStreet Ratings team rates LAREDO PETROLEUM INC as a Hold with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:
"We rate LAREDO PETROLEUM INC (LPI) a HOLD. The primary factors that have impacted our rating are mixed -- some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its revenue growth, compelling growth in net income and expanding profit margins. However, as a counter to these strengths, we find that we feel that the company's cash flow from its operations has been weak overall."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- LPI's revenue growth has slightly outpaced the industry average of 7.9%. Since the same quarter one year prior, revenues slightly increased by 1.4%. Growth in the company's revenue appears to have helped boost the earnings per share.
- The gross profit margin for LAREDO PETROLEUM INC is currently very high, coming in at 83.25%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 44.47% significantly outperformed against the industry average.
- Powered by its strong earnings growth of 433.33% and other important driving factors, this stock has surged by 40.86% over the past year, outperforming the rise in the S&P 500 Index during the same period. Setting our sights on the months ahead, however, we feel that the stock's sharp appreciation over the last year has driven it to a price level which is now relatively expensive compared to the rest of its industry. The implication is that its reduced upside potential is not good enough to warrant further investment at this time.
- The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. In comparison to the other companies in the Oil, Gas & Consumable Fuels industry and the overall market, LAREDO PETROLEUM INC's return on equity is significantly below that of the industry average and is below that of the S&P 500.
- Net operating cash flow has declined marginally to $89.29 million or 4.31% when compared to the same quarter last year. Despite a decrease in cash flow LAREDO PETROLEUM INC is still fairing well by exceeding its industry average cash flow growth rate of -23.15%.
- You can view the full analysis from the report here: LPI Ratings Report