Story updated at 10 a.m. to reflect market activity.
FMC Technologies gained 1% to $57.72 in morning trading.
The firm set a price target of $75 for the company. BMO analysts Alan Laws and Peyton Mason said the upgrade is due to FMC's volatility declining and its profitability rising.
"In our view, FTI's operational indigestion from the substantial growth in subsea equipment orders over past few years is subsiding and competitive dynamics are decreasing as all players sit on record backlogs," the analysts wrote. "We have until now shied away from FTI's secular growth story, primarily on a relative valuation basis but also given operational volatility of the past few years. While still not deep value, its multiple no longer gives us a nose bleed and we have greater confidence in its operational execution and, more importantly, its profitability and earnings growth potential."
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Separately, TheStreet Ratings team rates FMC TECHNOLOGIES INC as a Buy with a ratings score of A. TheStreet Ratings Team has this to say about their recommendation:
"We rate FMC TECHNOLOGIES INC (FTI) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its revenue growth, impressive record of earnings per share growth, compelling growth in net income, good cash flow from operations and largely solid financial position with reasonable debt levels by most measures. We feel these strengths outweigh the fact that the company has had somewhat disappointing return on equity."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- FTI's revenue growth has slightly outpaced the industry average of 8.3%. Since the same quarter one year prior, revenues rose by 11.2%. Growth in the company's revenue appears to have helped boost the earnings per share.
- FMC TECHNOLOGIES INC has improved earnings per share by 48.0% 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 two years. We feel that this trend should continue. During the past fiscal year, FMC TECHNOLOGIES INC increased its bottom line by earning $2.10 versus $1.78 in the prior year. This year, the market expects an improvement in earnings ($2.63 versus $2.10).
- The net income growth from the same quarter one year ago has exceeded that of the S&P 500 and greatly outperformed compared to the Energy Equipment & Services industry average. The net income increased by 47.7% when compared to the same quarter one year prior, rising from $120.40 million to $177.80 million.
- Net operating cash flow has significantly increased by 157.79% to $370.20 million when compared to the same quarter last year. In addition, FMC TECHNOLOGIES INC has also vastly surpassed the industry average cash flow growth rate of 23.52%.
- Despite currently having a low debt-to-equity ratio of 0.59, it is higher than that of the industry average, inferring that management of debt levels may need to be evaluated further. Regardless of the somewhat mixed results with the debt-to-equity ratio, the company's quick ratio of 0.95 is weak.
- You can view the full analysis from the report here: FTI Ratings Report