Why Wunderlich Upgraded Crosstex Energy (XTXI)

NEW YORK (TheStreet) -- Wunderlich Securities upgraded Crosstex Energy  (XTXI) to "buy" from "hold" and set a $51 price target. The firm notes the company can deliver above-average dividend growth over the coming quarters. 

By market open, shares had gained 2.9% to $41.50.

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TheStreet Ratings team rates CROSSTEX ENERGY INC as a Hold with a ratings score of C. The team has this to say about their recommendation:

"We rate CROSSTEX ENERGY INC (XTXI) 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 revenue growth, good cash flow from operations and solid stock price performance. However, as a counter to these strengths, we also find weaknesses including feeble growth in the company's earnings per share, deteriorating net income and generally higher debt management risk."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • XTXI's revenue growth has slightly outpaced the industry average of 2.4%. Since the same quarter one year prior, revenues slightly increased by 5.3%. 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.
  • Compared to its closing price of one year ago, XTXI's share price has jumped by 116.83%, exceeding the performance of the broader market during that same time frame. Regarding the stock's future course, our hold rating indicates that we do not recommend additional investment in this stock despite its gains in the past year.
  • 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. Compared to other companies in the Oil, Gas & Consumable Fuels industry and the overall market, CROSSTEX ENERGY INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • The gross profit margin for CROSSTEX ENERGY INC is currently extremely low, coming in at 12.99%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of -2.40% trails that of the industry average.

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