5 Stocks With Upgrades: DVN, HTLD, LRCX, XEC, CFN

NEW YORK ( TheStreet) -- The following stocks were upgraded to buy at TheStreet Ratings on Friday: Devon Energy ( DVN), Heartland Express ( HTLD), Lam Research ( LRCX), Cimarex Energy ( XEC) and CareFusion ( CFN).

Devon Energy

The energy company reported Wednesday fourth-quarter earnings of $507 million, or $1.25 a share, down from year-ago earnings of $562 million, or $1.29.

"Devon is moving back to a position where the investment case could evolve beyond simply a call on the commodity; while 4Q11 results impressed vs. expectations, guidance for the coming year points to growth in liquids that is evolving faster than prior expectations," Bank of America Merrill Lynch analysts wrote in a report Thursday. "Overall, Devon has increasingly shown the market a solid, reliable strategy - albeit one that typically evolves slower versus peers. However the share price reaction to what were arguably solid results and production guidance has perhaps embedded the most immediate upside potential in the stock so that versus a more tangible event horizons within our coverage universe, we continue to rate the stock Neutral."

Shares of Devon Energy were upgraded to buy from hold by TheStreet Ratings.

"The company's strengths can be seen in multiple areas, such as its robust revenue growth, largely solid financial position with reasonable debt levels by most measures, expanding profit margins, good cash flow from operations and growth in earnings per share," TheStreet Ratings wrote. "We feel these strengths outweigh the fact that the company has had sub par growth in net income."

Devon Energy has an estimated price-to-earnings ratio for next year of 9.85; the average for exploration and production companies is 19.33. For comparison, Anadarko ( APC) and EOG Resources ( EOG) both have higher forward P/Es of 18.39 and 17.54, respectively.

Of the 19 analysts who cover Devon Energy, 14 rated it a hold. Three analysts gave it a but rating and two rated it a sell.

TheStreet Ratings gives Devon Energy a B- grade with a $82.81 price target. The stock closed Thursday at $75.02 and has risen 21% year to date.

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Heartland Express

The trucking company reported last month fourth-quarter earnings of $17.1 million, or 20 cents a share, up from year-ago earnings of $15.4 million, or 17 cents.

"Management sounded more upbeat about TL fundamentals given a constrained fleet, a balanced supply/demand equation, and the potential for an economic recovery," Deutsche Bank analysts wrote in a Jan. 23 report. "HTLD hopes to achieve 2-3% rate growth (revenue/loaded mile, net of fuel) in 2012 and could see upside if drivers become more challenging. While the company was cautious about driver availability, HTLD does not currently plan to raise its industry-leading driver pay."

Shares of Heartland Express were upgraded to buy from hold by TheStreet Ratings.

"The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures, notable return on equity, growth in earnings per share and reasonable valuation levels," TheStreet Ratings wrote. "We feel these strengths outweigh the fact that the company has had lackluster performance in the stock itself."

Heartland Express has a forward P/E of 17.22; the average for trucking companies is 15.88. For comparison, Old Dominion Freight Line ( ODFL) and Werner Enterprises ( WERN) both have lower forward P/Es of 14 and 13.98, respectively.

Fourteen of the 19 analysts who cover Heartland Express gave it a hold rating. Three analysts rated it a buy and two gave it a sell rating.

Heartland Express gets a B grade from TheStreet Ratings with a $16.96 price target. The stock closed at $15.05 Thursday and has increased 5.32% year to date.


Lam Research

"LRCX filed the proxy for its proposed merger with NVLS Novellus Systems yesterday after the close," Credit Suisse analysts wrote in a Feb. 1 report. "There is no change in our view that the LRCX/NVLS merger will go through, and that it is unlikely that Tokyo Electron (TEL) will come in with an higher offer for NVLS."

Shares of Lam Research, the semiconductor company, were upgraded to buy from hold by TheStreet Ratings.

Lam Research has a forward P/E of 11.46; the average for semiconductor companies is 16.93. For comparison, KLA-Tencor ( KLAC) has a lower forward P/E of 10.98 and Micron Technology's ( MU) is 17.63.

Fifteen of the 18 analysts who cover Lam Research rated it a buy. Two analysts gave it a hold rating and one rated it a sell.

TheStreet Ratings gives Lam Research a B- grade with a $48.22 price target. The stock closed Thursday at $42.95 and has risen 16.02% year to date.

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Cimarex Energy

The oil and gas exploration company reported Wednesday fourth-quarter earnings of $116.9 million, or $1.36 a share, slightly down from year-ago earnings of $117.6 million, or $1.37.

"We reiterate our Perform rating on the shares due to XEC's below-average production growth rate, estimated at 4-10% in 2012, and an oil/gas production mix that continues to be highly levered to gas. XEC does not have any gas hedges in 2012 or 2013, leaving it fully exposed to the current low gas price environment," Oppenheimer analysts wrote in a report Thursday.

Shares of Cimarex Energy were upgraded to buy from hold by TheStreet Ratings.

Cimarex has a forward P/E of 11.61; the average for exploration and production companies is 20.04. For comparison, Southwestern Energy ( SWN) and Concho Resources ( CXO) both have higher forward P/Es of 21.47 and 21.87, respectively.

Thirteen of the 21 analysts who cover Cimarex rated it a buy; eight rated it a hold.

Cimarex gets a B- grade from TheStreet Ratings with a $94.24 price target. The stock closed Thursday at $80.96 and has increased 30.79% year to date.


CareFusion

The medical technology company earlier this month reported second-quarter earnings of $95 million, or 42 cents a share, up from year-ago earnings of $76 million, or 34 cents.

"We estimate that in order to meet management's goal of 20%-plus operating margin exiting fiscal 2014, the company needs to reduce expenses by 3% from the fiscal 2011 base," Morgan Keegan analysts wrote in a report Friday. "Given the sheer number of cost reduction initiatives that are ongoing, we believe that management can meets its goals."

Shares of CareFusion were upgraded to buy from hold by TheStreet Ratings.

CareFusion has a forward P/E of 12.89; the average for medical equipment companies is 32.59. For comparison, Abiomed ( ABMD) has a forward P/E of 121.79.

Of the 16 analysts who cover CareFusion, nine rated it a buy and seven rated it a hold.

TheStreet Ratings gives CareFusion a B grade with a $29.29 price target. The stock closed Thursday at $25.86 and has increased 1.77% year to date.

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-- Written by Alexandra Zendrian

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