NEW YORK (TheStreet) -- Kodiak Oil & Gas (KOG) had coverage initiated on its shares with a "buy" rating by Bank of America/Merrill Lynch (BAC - Get Report). The firm also set a price target of $16 for the company.
Kodiak Oil & Gas is up 1.9% to $12.66 in early trading Friday.
Warren Buffett's 10 Favorite Growth Stocks
STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.
BofA Merrill sees a continuing trend of increasing efficiency leading to decreasing production costs as the reason for the rating.
"We look for continued production growth momentum into 2014 with expected 46% yoy growth. At the same time, efficiencies have improved with average well costs down 13% in 2013, with room to decrease," the note said.
Separately, TheStreet Ratings team rates KODIAK OIL & GAS CORP as a Buy with a ratings score of A-. TheStreet Ratings Team has this to say about their recommendation:
"We rate KODIAK OIL & GAS CORP (KOG) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its robust revenue growth, solid stock price performance, growth in earnings per share, increase in net income and good cash flow from operations. We feel these strengths outweigh the fact that the company has had generally high debt management risk by most measures that we evaluated."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- KOG's very impressive revenue growth greatly exceeded the industry average of 7.9%. Since the same quarter one year prior, revenues leaped by 103.6%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- Powered by its strong earnings growth of 41.66% and other important driving factors, this stock has surged by 25.37% over the past year, outperforming the rise in the S&P 500 Index during the same period. Regarding the stock's future course, although almost any stock can fall in a broad market decline, KOG should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
- KODIAK OIL & GAS CORP has improved earnings per share by 41.7% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, KODIAK OIL & GAS CORP increased its bottom line by earning $0.53 versus $0.49 in the prior year. This year, the market expects an improvement in earnings ($0.89 versus $0.53).
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Oil, Gas & Consumable Fuels industry. The net income increased by 39.9% when compared to the same quarter one year prior, rising from $33.29 million to $46.57 million.
- Net operating cash flow has significantly increased by 59.87% to $168.07 million when compared to the same quarter last year. In addition, KODIAK OIL & GAS CORP has also vastly surpassed the industry average cash flow growth rate of -23.15%.
- You can view the full analysis from the report here: KOG Ratings Report