NEW YORK (TheStreet) -- Shares of Carrizo Oil & Gas (CRZO - Get Report) are falling 2.07% to $51.17 in Monday's early morning trading after analysts at Goldman Sachs initiated coverage of the independent energy company with a "neutral" rating and a price target of $56. 

This action comes after the company reported first quarter results earlier this month. The company reported revenue of $100.1 million, or $2.19 per basic share compared to revenue of $157.2 million, or $2.54 per basic share in the first quarter of 2014.

"The first quarter was a challenging environment for our industry given the sell-off in commodity prices," President and CEO Chip Johnson, IV said. 

While the company reported weak first quarter results, he added that drilling density tests in the Eagle Ford and Niobrara are meeting the company's expectations, and raised this year's crude oil production growth target to 18%.

The Houston-based energy company is actively engaged in the exploration, development, and production of oil and gas primarily from resource plays located in the United States.

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 multiple 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 largely solid financial position with reasonable debt levels by most measures, notable return on equity and expanding profit margins. We feel its 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 debt-to-equity ratio is somewhat low, currently at 0.95, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels. Even though the company has a strong debt-to-equity ratio, the quick ratio of 0.22 is very weak and demonstrates a lack of ability to pay short-term obligations.
  • The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. Compared to other companies in the Oil, Gas & Consumable Fuels industry and the overall market on the basis of return on equity, CARRIZO OIL & GAS INC has underperformed in comparison with the industry average, but has exceeded that of the S&P 500.
  • Regardless of the drop in revenue, the company managed to outperform against the industry average of 38.3%. Since the same quarter one year prior, revenues fell by 36.4%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • The gross profit margin for CARRIZO OIL & GAS INC is currently very high, coming in at 71.25%. Despite the high profit margin, it has decreased significantly from the same period last year. Despite the mixed results of the gross profit margin, CRZO's net profit margin of -21.19% significantly underperformed when compared to the industry average.
  • CARRIZO OIL & GAS INC 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. This company has reported somewhat volatile earnings recently. We feel it is likely to report a decline in earnings in the coming year. During the past fiscal year, CARRIZO OIL & GAS INC increased its bottom line by earning $4.81 versus $0.56 in the prior year. For the next year, the market is expecting a contraction of 77.3% in earnings ($1.09 versus $4.81).
  • You can view the full analysis from the report here: CRZO Ratings Report