NEW YORK (TheStreet) -- Shares of Patterson-UTI Energy (PTEN) - Get Report were rising in mid-afternoon trading on Thursday as DA Davidson initiated coverage of the stock with a "buy" rating and $26 price target.
"We believe the combination of Patterson's high-quality land drilling fleet and modern pressure pumping equipment, provides a one-two punch to weather the downturn and accelerate earnings growth through the recovery," the firm wrote in an analyst note earlier today.
The Snyder, TX-based company owns and operates fleets of land-based drilling rigs and pressure pumping equipment.
While DA Davidson believes pressure pumping pricing will likely remain constrained until existing utilization improves, the continued growth in completions intensity will catalyze improved pricing as new equipment is brought into service.
The company's concentrated footprint in Marcellus Formation, Permian Basin and Eagleford Shale should provide economies of scale and also enhance its reputation for regional knowledge and efficient operations.
Additionally, oil prices were gaining in mid-afternoon trading. Crude oil (WTI) was recently advancing 1.06% to $44.04 per barrel and Brent crude was up 1.81% to $46.68 per barrel.
Separately, TheStreet Ratings Team has a "Sell" rating with a score of D+ on the stock.
The company's weaknesses can be seen in multiple areas, such as its feeble growth in its earnings per share, disappointing return on equity, poor profit margins, weak operating cash flow and deteriorating net income.
Recently, TheStreet Ratings objectively rated this stock according to its "risk-adjusted" total return prospect over a 12-month investment horizon. Not based on the news in any given day, the rating may differ from Jim Cramer's view or that of this articles's author.
You can view the full analysis from the report here: PTEN