Story updated at 9:40 a.m. to reflect market activity.
Shares of ONEOK gaing 0.4% to $58.75 in morning trading.
The firm set a price target of $61 for the gas utilities company. Despite a solid footprint and growth opportunities, UBS analysts wrote that decreasing dividend growth compresses the valuation of the stock.
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Separately, TheStreet Ratings team rates ONEOK INC as a Buy with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation:
"We rate ONEOK INC (OKE) a BUY. This is driven by a number of 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, good cash flow from operations and solid stock price performance. We feel these strengths outweigh the fact that the company has had generally high debt management risk by most measures that we evaluated."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The revenue growth came in higher than the industry average of 7.9%. Since the same quarter one year prior, revenues rose by 13.1%. 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.
- Net operating cash flow has increased to $273.22 million or 19.78% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of -23.15%.
- Compared to its closing price of one year ago, OKE's share price has jumped by 26.02%, exceeding the performance of the broader market during that same time frame. We feel that the stock's sharp appreciation over the last year has driven it to a price level which is now somewhat expensive compared to the rest of its industry. The other strengths this company shows, however, justify the higher price levels.
- ONEOK INC's earnings per share declined by 18.9% in the most recent quarter compared to 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, ONEOK INC reported lower earnings of $1.27 versus $1.65 in the prior year. This year, the market expects an improvement in earnings ($1.71 versus $1.27).
- The change in net income from the same quarter one year ago has exceeded that of the Oil, Gas & Consumable Fuels industry average, but is less than that of the S&P 500. The net income has decreased by 18.6% when compared to the same quarter one year ago, dropping from $111.54 million to $90.74 million.
- You can view the full analysis from the report here: OKE Ratings Report