Story updated at 10 a.m. to reflect market activity.
MarkWest Energy fell 1.4% to $63.13 in morning trading.
The firm set a price target of $70 for the company. Barclays analysts said the downgrade was driven by a large initial investment for infrastructure and expensive acquisitions.
Separately, TheStreet Ratings team rates MARKWEST ENERGY PARTNERS LP as a Buy with a ratings score of B-. TheStreet Ratings Team has this to say about their recommendation:
"We rate MARKWEST ENERGY PARTNERS LP (MWE) a BUY. This is driven by multiple strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its robust revenue growth and expanding profit margins. We feel these strengths outweigh the fact that the company has had sub par growth in net income."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The revenue growth greatly exceeded the industry average of 7.5%. Since the same quarter one year prior, revenues rose by 22.9%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
- 35.61% is the gross profit margin for MARKWEST ENERGY PARTNERS LP which we consider to be strong. Regardless of MWE's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of -1.44% trails the industry average.
- MARKWEST ENERGY PARTNERS 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. The company has suffered a declining pattern of earnings per share over the past year. However, we anticipate this trend reversing over the coming year. During the past fiscal year, MARKWEST ENERGY PARTNERS LP reported lower earnings of $0.21 versus $1.70 in the prior year. This year, the market expects an improvement in earnings ($1.19 versus $0.21).
- MWE's debt-to-equity ratio of 0.74 is somewhat low overall, but it is high when compared to the industry average, implying that the management of the debt levels should be evaluated further. Even though the debt-to-equity ratio shows mixed results, the company's quick ratio of 0.45 is very low and demonstrates very weak liquidity.
- Net operating cash flow has declined marginally to $104.99 million or 1.87% when compared to the same quarter last year. Despite a decrease in cash flow MARKWEST ENERGY PARTNERS LP is still fairing well by exceeding its industry average cash flow growth rate of -22.86%.
- You can view the full analysis from the report here: MWE Ratings Report