NEW YORK (TheStreet) -- Northwestern Corp. (NWE - Get Report) shares were upgraded to "buy" from "hold" by analysts at KeyBanc on Monday, who also set a price target of $51.50 on the company's shares.
The price target represents a 7% increase over the company's closing price on Friday.
"While we appreciate the fact that shares are likely to be subject to an overhang from the need to issue up to $400 million of equity to fund the hydro acquisition, we believe investors with a longer-term perspective will be rewarded by commencing to build a position now," said analysts.
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TheStreet Ratings team rates NORTHWESTERN CORP as a Buy with a ratings score of A-. TheStreet Ratings Team has this to say about their recommendation:
"We rate NORTHWESTERN CORP (NWE) 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 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 shows low profit margins."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The revenue growth came in higher than the industry average of 7.7%. Since the same quarter one year prior, revenues rose by 18.1%. Growth in the company's revenue appears to have helped boost the earnings per share.
- The stock has risen over the past year as investors have generally rewarded the company for its earnings growth and other positive factors like the ones we have cited in this report. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
- NORTHWESTERN CORP has improved earnings per share by 15.8% 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, NORTHWESTERN CORP reported lower earnings of $2.45 versus $2.66 in the prior year. This year, the market expects an improvement in earnings ($2.70 versus $2.45).
- The net income growth from the same quarter one year ago has exceeded that of the Multi-Utilities industry average, but is less than that of the S&P 500. The net income increased by 20.3% when compared to the same quarter one year prior, going from $37.90 million to $45.58 million.
- Net operating cash flow has remained constant at $112.24 million with no significant change when compared to the same quarter last year. This quarter, NORTHWESTERN CORP's cash flow growth rate has remained relatively unchanged and is slightly below the industry average.
- You can view the full analysis from the report here: NWE Ratings Report