NEW YORK (TheStreet) -- Carrizo Oil & Gas (CRZO) shares were upgraded to "buy" from "hold" by analysts at KLR Group who set an $80 price target on the company's shares.
The more optimistic outlook comes a day after the company said that it expects a 57% growth rate in full year oil production in 2014, while also reporting second quarter earnings and revenue ahead of analysts expectations.
Carrizo shares closed trading yesterday at $59.94 on heavy volume that was almost three times the company's daily average.
TheStreet Ratings team rates CARRIZO OIL & GAS INC as a Buy with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation:
"We rate CARRIZO OIL & GAS INC (CRZO) a BUY. This is driven by a few notable 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 robust revenue growth, expanding profit margins, good cash flow from operations, solid stock price performance and growth in earnings per share. 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:
- The revenue growth greatly exceeded the industry average of 1.5%. Since the same quarter one year prior, revenues rose by 40.5%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- The gross profit margin for CARRIZO OIL & GAS INC is currently very high, coming in at 87.20%. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of 3.80% trails the industry average.
- Net operating cash flow has increased to $102.39 million or 12.36% when compared to the same quarter last year. Despite an increase in cash flow, CARRIZO OIL & GAS INC's average is still marginally south of the industry average growth rate of 18.80%.
- Powered by its strong earnings growth of 133.33% and other important driving factors, this stock has surged by 93.90% over the past year, outperforming the rise in the S&P 500 Index during the same period. 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.
- CARRIZO OIL & GAS INC reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, CARRIZO OIL & GAS INC reported lower earnings of $0.56 versus $1.28 in the prior year. This year, the market expects an improvement in earnings ($2.86 versus $0.56).
- You can view the full analysis from the report here: CRZO Ratings Report