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Will This Upgrade Help Oasis Petroleum (OAS) Stock Today?

Stocks in this article: OAS

Story updated at 9:55 a.m. to reflect market activity.

NEW YORK (TheStreet) -- Oasis Petroleum (OAS) was upgraded to "buy" from "neutral" by Sterne Agee Monday.

Shares of Oasis were gaining 1.5% to $48.23 in morning trading.

The analyst set a price target of $59 for the company. Oasis' sell-off appears overdone, and the company's margin visibility is improving according to Sterne Agee analysts.

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

"We rate OASIS PETROLEUM INC (OAS) 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, good cash flow from operations, notable return on equity, increase in stock price during the past year 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 2.1%. Since the same quarter one year prior, revenues rose by 46.3%. 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.
  • Net operating cash flow has increased to $277.99 million or 48.44% when compared to the same quarter last year. In addition, OASIS PETROLEUM INC has also vastly surpassed the industry average cash flow growth rate of -7.19%.
  • The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Oil, Gas & Consumable Fuels industry and the overall market on the basis of return on equity, OASIS PETROLEUM INC has underperformed in comparison with the industry average, but has exceeded that of the S&P 500.
  • Compared to where it was a year ago today, the stock is now trading at a higher level, regardless of the company's weak earnings results. Looking ahead, unless broad bear market conditions prevail, we still see more upside potential for this stock, despite the fact that it has already risen over the past year.
  • OASIS PETROLEUM INC's earnings per share declined by 45.8% 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, OASIS PETROLEUM INC increased its bottom line by earning $2.44 versus $1.66 in the prior year. This year, the market expects an improvement in earnings ($3.15 versus $2.44).
  • You can view the full analysis from the report here: OAS Ratings Report

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Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

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