NEW YORK (TheStreet) -- Shares of Rosetta Resources Inc. (ROSE) are climbing higher by 0.08% to $24.60 in late morning trading Tuesday, despite the company getting downgraded to "sector weight" from "overweight" by analysts at KeyBanc earlier today.
The firm also removed its $28 price target on shares of the oil and gas producer.
Noble paid $26.62 per share, which represents a 38% premium on Rosetta's closing price from Friday. The deal is expected to close in the third quarter of this year.
Houston-based Rosetta Resources is an independent exploration and production company engaged in the acquisition and development of onshore energy resources in the U.S.
Insight from TheStreet's Research Team:
Jim Cramer commented on Rosetta Resources in a recent post on RealMoney.com. Here is a snippet of what Cramer had to say about the stock:
Rosetta is a game changer. I have been waiting for real consolidation among the shale drillers, and here we go, with Noble (NBL) buying Rosetta Resources (ROSE) for a couple of billion and a beautiful $6 premium to where the stock stood Friday.
This deal involves Noble getting prime acreage in three key areas -- the Delaware Basin, the Permian and Eagle Ford. Ironically, these holdings are very close to where Pioneer(PXD) and EOG (EOG) have acreage. It's ironic because they were the companies targeted by hedge fund manager David Einhorn as shorts -- the Mother Fracker and the Father Fracker, respectively.
This buy is a bargain, I think, for Noble given that Rosetta is down dramatically from where it was when oil was higher. Rosetta is a high-quality company with tremendous assets where Noble needs them most.
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Separately, TheStreet Ratings team rates ROSETTA RESOURCES INC as a Sell with a ratings score of D. TheStreet Ratings Team has this to say about their recommendation:
"We rate ROSETTA RESOURCES INC (ROSE) a SELL. This is driven by several weaknesses, 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, weak operating cash flow and generally disappointing historical performance in the stock itself."
You can view the full analysis from the report here: ROSE Ratings Report