NEW YORK (TheStreet) -- Ultra Petroleum Corp (UPL) was upgraded to "outperform" from "market perform" by Raymond James (RJF) on Monday. The firm set a price target of $36 for the company's shares.
The firm pointed to increased production growth and decreased leverage as reasons for the upgrade.
"Our upgrade is predicated on three key points: we see tighter gas storage paving the way for improvement in 2015 gas prices; we expect Ultra production growth to trend closer to 15% than current guidance of 5-9%; we expect leverage to fall from 3.6x at year end 2013 (post-Uinta Basin acquisition) to 2.5x in the next 12-18 months." Raymond James said.
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Separately, TheStreet Ratings team rates ULTRA PETROLEUM CORP as a Hold with a ratings score of C-. TheStreet Ratings Team has this to say about their recommendation:
"We rate ULTRA PETROLEUM CORP (UPL) 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 solid stock price performance, impressive record of earnings per share growth and compelling growth in net income. However, as a counter to these strengths, we find that we feel that the company's cash flow from its operations has been weak overall."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- Powered by its strong earnings growth of 108.73% and other important driving factors, this stock has surged by 50.42% over the past year, outperforming the rise in the S&P 500 Index during the same period. 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.
- ULTRA PETROLEUM CORP reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past year. We feel that this trend should continue. This trend suggests that the performance of the business is improving. During the past fiscal year, ULTRA PETROLEUM CORP turned its bottom line around by earning $1.54 versus -$14.24 in the prior year. This year, the market expects an improvement in earnings ($2.31 versus $1.54).
- UPL, with its decline in revenue, slightly underperformed the industry average of 7.8%. Since the same quarter one year prior, revenues fell by 13.6%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
- Net operating cash flow has decreased to $145.57 million or 16.69% when compared to the same quarter last year. Despite a decrease in cash flow of 16.69%, ULTRA PETROLEUM CORP is in line with the industry average cash flow growth rate of -23.34%.
- You can view the full analysis from the report here: UPL Ratings Report