NEW YORK (TheStreet) -- Boradwalk Pipeline (BWP - Get Report) shares are up 3.4% to $16.26 in early market trading on Monday.
The increase follows the interstate natural gas pipeline owner and operator shares being upgraded to "outperform" from "sector perform" by analysts at RBC Capital.
The firm raised its price target to $22 from $14.
"While the challenging environment in the natural gas base business and the associated limited near-to-medium distribution growth potential are negatives, we believe BWP is well-positioned to benefit from strong demand for natural gas pipeline reversals. We expect BWP to achieve its targeted credit metrics by 2016, at which point we forecast a distribution increase," said analysts at the firm.
TheStreet Ratings team rates BOARDWALK PIPELINE PRTNRS-LP as a Hold with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:
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"We rate BOARDWALK PIPELINE PRTNRS-LP (BWP) 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. Among the primary strengths of the company is its expanding profit margins over time. At the same time, however, we also find weaknesses including a generally disappointing performance in the stock itself, feeble growth in the company's earnings per share and deteriorating net income."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- Regardless of the drop in revenue, the company managed to outperform against the industry average of 7.6%. Since the same quarter one year prior, revenues slightly dropped by 3.9%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
- The gross profit margin for BOARDWALK PIPELINE PRTNRS-LP is rather high; currently it is at 57.14%. Regardless of BWP's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, BWP's net profit margin of 6.23% compares favorably to the industry average.
- Net operating cash flow has decreased to $132.30 million or 18.02% when compared to the same quarter last year. Despite a decrease in cash flow of 18.02%, BOARDWALK PIPELINE PRTNRS-LP is in line with the industry average cash flow growth rate of -22.97%.
- BOARDWALK PIPELINE PRTNRS-LP has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. Earnings per share have declined over the last two years. We anticipate that this should continue in the coming year. During the past fiscal year, BOARDWALK PIPELINE PRTNRS-LP reported lower earnings of $0.99 versus $1.37 in the prior year. For the next year, the market is expecting a contraction of 15.2% in earnings ($0.84 versus $0.99).
- The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Oil, Gas & Consumable Fuels industry. The net income has significantly decreased by 78.3% when compared to the same quarter one year ago, falling from $90.10 million to $19.50 million.
- You can view the full analysis from the report here: BWP Ratings Report