NEW YORK (TheStreet) -- Patterson-UTI Energy (PTEN) has been upgraded to "buy" from "neutral" with a $37 price target, said Goldman Sachs Monday. The firm also placed the company on its Conviction List. Goldman said to expect higher onshore pricing in North America.
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Separately, TheStreet Ratings team rates PATTERSON-UTI ENERGY INC as a Buy with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation:
"We rate PATTERSON-UTI ENERGY INC (PTEN) a BUY. This is driven by multiple strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. 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, good cash flow from operations, expanding profit margins and increase in stock price during the past year. We feel these strengths outweigh the fact that the company has had sub par growth in net income."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- Despite its growing revenue, the company underperformed as compared with the industry average of 8.3%. Since the same quarter one year prior, revenues slightly increased by 0.9%. 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.
- PTEN's debt-to-equity ratio is very low at 0.25 and is currently below that of the industry average, implying that there has been very successful management of debt levels. To add to this, PTEN has a quick ratio of 1.98, which demonstrates the ability of the company to cover short-term liquidity needs.
- Net operating cash flow has slightly increased to $232.17 million or 4.11% when compared to the same quarter last year. Despite an increase in cash flow, PATTERSON-UTI ENERGY INC's cash flow growth rate is still lower than the industry average growth rate of 23.31%.
- 35.32% is the gross profit margin for PATTERSON-UTI ENERGY INC which we consider to be strong. Regardless of PTEN's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, PTEN's net profit margin of 2.51% is significantly lower than the industry average.
- PATTERSON-UTI ENERGY INC has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. The company has suffered a declining pattern of earnings per share over the past two years. However, we anticipate this trend to reverse over the coming year. During the past fiscal year, PATTERSON-UTI ENERGY INC reported lower earnings of $1.28 versus $1.95 in the prior year. This year, the market expects an improvement in earnings ($1.35 versus $1.28).
- You can view the full analysis from the report here: PTEN Ratings Report