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Will This Upgrade Help Bonanza Creek Energy (BCEI) Stock On Tuesday?

NEW YORK (TheStreet) --Bonanza Creek Energy Inc. (BCEI) was upgraded to "buy" from "hold" at Topeka Capital on Tuesday.

The firm said it upgraded the oil and natural gas company and raised its price target on the stock to $68 from $50 as the firm thinks the Wattenberg Field acquisition will add to earnings.

On May 22, Bonanza Creek announced its agreement to pay $175.5 million in cash and issue up to 1.1 million shares of stock to purchase assets, from an unidentified privately held company, that consist of 86,400 acres and a net production of 700 BOE per day, according to Reuters.

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Separately, TheStreet Ratings team rates BONANZA CREEK ENERGY INC as a Buy with a ratings score of B-. TheStreet Ratings Team has this to say about their recommendation:

"We rate BONANZA CREEK ENERGY INC (BCEI) a BUY. This is driven by several positive factors, 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, compelling growth in net income, good cash flow from operations, solid stock price performance and expanding profit margins. Although no company is perfect, currently we do not see any significant weaknesses which are likely to detract from the generally positive outlook."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • BCEI's very impressive revenue growth greatly exceeded the industry average of 3.0%. Since the same quarter one year prior, revenues leaped by 62.7%. 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.
  • The net income growth from the same quarter one year ago has significantly exceeded that of the Oil, Gas & Consumable Fuels industry average, but is less than that of the S&P 500. The net income increased by 20.2% when compared to the same quarter one year prior, going from $11.26 million to $13.53 million.
  • Net operating cash flow has significantly increased by 102.87% to $77.68 million when compared to the same quarter last year. In addition, BONANZA CREEK ENERGY INC has also vastly surpassed the industry average cash flow growth rate of 17.08%.
  • Compared to its closing price of one year ago, BCEI's share price has jumped by 36.58%, exceeding the performance of the broader market during that same time frame. We feel that the stock's sharp appreciation over the last year has driven it to a price level which is now somewhat expensive compared to the rest of its industry. The other strengths this company shows, however, justify the higher price levels.
  • BONANZA CREEK ENERGY INC's earnings per share declined by 14.3% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, BONANZA CREEK ENERGY INC increased its bottom line by earning $1.72 versus $1.11 in the prior year. This year, the market expects an improvement in earnings ($2.73 versus $1.72).
  • You can view the full analysis from the report here: BCEI Ratings Report
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