NEW YORK (TheStreet) -- Halcon Resources (HK) stock is gaining Thursday after Wunderlich Securities upped its price target to $9 from $7 and reiterated a "buy" rating. The firm cited potential good news stemming from the upcoming issue of well results out of its Tuscaloosa Marine Shale property. By late afternoon, shares had added 4.8% to $6.34.
"Upcoming data points including peer well results (which recently have been solid), Halcon's initial well results, and the potential for a joint venture in the sizeable asset could really begin to show the value in the play while also allowing Halcon to boost its production and liquidity positions nicely," analyst Jason Wangler wrote in the report.
Separately, TheStreet Ratings team rates HALCON RESOURCES CORP as a Sell with a ratings score of D+. TheStreet Ratings Team has this to say about their recommendation:
"We rate HALCON RESOURCES CORP (HK) a SELL. This is driven by a number of negative factors, which we believe should have a greater impact than any strengths, and could make it more difficult for investors to achieve positive results compared to most of the stocks we cover. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income, generally high debt management risk, disappointing return on equity and feeble growth in its earnings per share."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Oil, Gas & Consumable Fuels industry. The net income has significantly decreased by 1435.1% when compared to the same quarter one year ago, falling from $5.47 million to -$72.96 million.
- The debt-to-equity ratio is very high at 2.56 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. Along with this, the company manages to maintain a quick ratio of 0.46, which clearly demonstrates the inability to cover short-term cash needs.
- 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, HALCON RESOURCES CORP's return on equity significantly trails that of both the industry average and the S&P 500.
- HALCON RESOURCES CORP 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 reported a trend of declining earnings per share over the past year. However, the consensus estimate suggests that this trend should reverse in the coming year. During the past fiscal year, HALCON RESOURCES CORP reported poor results of -$3.11 versus -$1.24 in the prior year. This year, the market expects an improvement in earnings ($0.15 versus -$3.11).
- The gross profit margin for HALCON RESOURCES CORP is rather high; currently it is at 52.65%. Despite the high profit margin, it has decreased significantly from the same period last year. Despite the mixed results of the gross profit margin, HK's net profit margin of -26.61% significantly underperformed when compared to the industry average.
- You can view the full analysis from the report here: HK Ratings Report