NEW YORK (TheStreet) -- Credit Suisse initiated coverage of Oasis Petroleum (OAS) - Get Oasis Petroleum Inc. Reportstock with a "neutral" rating on Wednesday. The firm set a $12 price target on the stock.
The Houston-based oil and natural gas company's core inventory will likely last for eight to 10 years, according to Credit Suisse.
"Over the past year, OAS has rolled out new slickwater and high volume proppant completion techniques that have the potential to drive significantly better yields out of core and non-core locations," the firm said in a note.
Oasis offers near term monetization potential and "a compelling story should oil prices improve materially," the firm added.
"Given the company's high leverage and dependence on future improvements to truly ride the commodity storm, we initiate at "neutral" as other companies within our coverage offer better upside potential, cleaner balance sheets, and better optionality to a commodity price recovery," the firm said.
Shares of Oasis were up 9.73% to $11.62 in morning trading on Wednesday.
Separately, TheStreet Ratings team rates OASIS PETROLEUM INC as a Hold with a ratings score of C-. TheStreet Ratings Team has this to say about their recommendation:
We rate OASIS PETROLEUM INC (OAS) 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 reasonable valuation levels and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, generally higher debt management risk and disappointing return on equity.
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The gross profit margin for OASIS PETROLEUM INC is rather high; currently it is at 66.89%. Regardless of OAS's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, OAS's net profit margin of -23.13% significantly underperformed when compared to the industry average.
- The debt-to-equity ratio of 1.03 is relatively high when compared with the industry average, suggesting a need for better debt level management. Along with this, the company manages to maintain a quick ratio of 0.45, which clearly demonstrates the inability to cover short-term cash needs.
- Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. When compared to other companies in the Oil, Gas & Consumable Fuels industry and the overall market, OASIS PETROLEUM INC's return on equity is below that of both the industry average and the S&P 500.
- You can view the full analysis from the report here: OAS