NEW YORK (TheStreet) -- SandRidge Energy (SD - Get Report) shares are up 1.1% to $5.30 on Tuesday after being upgraded to "buy" from "hold" by analysts at Stifel (SF - Get Report) , who set a price target of $6.75.
Analysts at the firm said that the upgraded outlook was a valuation call on the independent oil and natural gas company.
The firms price target represents a 27% upside from the stock's current trading price. SandRidge shares are trading on heavy volume with 1.9 million shares moving in early market trading so far today.
TheStreet Ratings team rates SANDRIDGE ENERGY INC as a Hold with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:
"We rate SANDRIDGE ENERGY INC (SD) 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 expanding profit margins, notable return on equity and increase in stock price during the past year. However, as a counter to these strengths, we also find weaknesses including unimpressive growth in net income, weak operating cash flow and generally higher debt management risk."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The gross profit margin for SANDRIDGE ENERGY INC is currently very high, coming in at 74.91%. It has increased significantly from the same period last year. Regardless of the strong results of the gross profit margin, the net profit margin of -6.52% is in-line with the industry average.
- SD, with its decline in revenue, underperformed when compared the industry average of 3.5%. Since the same quarter one year prior, revenues fell by 26.9%. The declining revenue appears to have seeped down to the company's bottom line, decreasing earnings per share.
- In its most recent trading session, SD has closed at a price level that was not very different from its closing price of one year earlier. This is probably due to its weak earnings growth as well as other mixed factors. Despite the fact that it has already risen in the past year, there is currently no conclusive evidence that warrants the purchase or sale of this stock.
- The company, on the basis of change in net income from the same quarter one year ago, has underperformed when compared to that of the S&P 500 and greatly underperformed compared to the Oil, Gas & Consumable Fuels industry average. The net income has decreased by 19.6% when compared to the same quarter one year ago, dropping from -$20.44 million to -$24.44 million.
- Net operating cash flow has decreased to $140.34 million or 46.68% when compared to the same quarter last year. In addition, when comparing the cash generation rate to the industry average, the firm's growth is significantly lower.
- You can view the full analysis from the report here: SD Ratings Report
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