Story updated at 9:55 a.m. to reflect market activity.
Oneko gained 0.1% to $64.64 in morning trading.
The firm set a price target of $66 for the company. BMO Capital analysts said the downgrade was a valuation call as Oneok's stock is up 54% over the past year.
Separately, TheStreet Ratings team rates ONEOK INC as a Hold with a ratings score of C+. TheStreet Ratings Team has this to say about their recommendation:
"We rate ONEOK INC (OKE) 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 notable return on equity, good cash flow from operations and solid stock price performance. However, as a counter to these strengths, we also find weaknesses including generally higher debt management risk, deteriorating net income and poor profit margins."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. Compared to other companies in the Oil, Gas & Consumable Fuels industry and the overall market, ONEOK INC's return on equity significantly exceeds that of both the industry average and the S&P 500.
- Net operating cash flow has slightly increased to $490.38 million or 4.00% when compared to the same quarter last year. Despite an increase in cash flow, ONEOK INC's cash flow growth rate is still lower than the industry average growth rate of 16.59%.
- The change in net income from the same quarter one year ago has exceeded that of the Oil, Gas & Consumable Fuels industry average, but is less than that of the S&P 500. The net income has decreased by 16.9% when compared to the same quarter one year ago, dropping from $112.52 million to $93.52 million.
- The debt-to-equity ratio is very high at 12.55 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. To add to this, OKE has a quick ratio of 0.58, this demonstrates the lack of ability of the company to cover short-term liquidity needs.
- You can view the full analysis from the report here: OKE Ratings Report