NEW YORK (TheStreet) -- Shares of Frontline (FRO) were gaining, higher by 5.61% to $3.01 in late morning trading Wednesday, after analysts at Morgan Stanley raised their rating on the oil tanker shipping company this morning.
Analysts at the firm upgraded Frontline to "equal weight" from "underweight" with a higher price target of $3 from its prior $2.50.
Morgan Stanley cited a balanced risk/reward, manageable liabilities, and leverage to an improving tanker market for its higher rating and price objective.
Bermuda-based Frontline is a shipping company engaged primarily in the ownership and operation of oil tanker.
The company operates oil tankers through subsidiaries and partnerships located in the Bahamas, Bermuda, the Cayman Islands, India, the Isle of Man, Liberia, Norway, the U.K., and Singapore.
Frontline's principal focus is the transportation of crude oil and its related refined dirty petroleum cargoes for oil companies and oil trading companies.
Separately, TheStreet Ratings team rates FRONTLINE LTD as a Sell with a ratings score of D. TheStreet Ratings Team has this to say about their recommendation:
"We rate FRONTLINE LTD (FRO) 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 poor profit margins and generally disappointing historical performance in the stock itself."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The gross profit margin for FRONTLINE LTD is currently lower than what is desirable, coming in at 26.96%. Regardless of FRO's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, FRO's net profit margin of -9.60% significantly underperformed when compared to the industry average.
- In its most recent trading session, FRO has closed at a price level that was not very different from its closing price of one year earlier. This is probably due to its weak earnings growth as well as other mixed factors. The fact that the stock is now selling for less than others in its industry in relation to its current earnings is not reason enough to justify a buy rating at this time.
- Despite the weak revenue results, FRO has significantly outperformed against the industry average of 38.5%. Since the same quarter one year prior, revenues slightly dropped by 5.9%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
- FRONTLINE LTD has improved earnings per share by 20.0% 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 year. We feel that this trend should continue. This trend suggests that the performance of the business is improving. During the past fiscal year, FRONTLINE LTD continued to lose money by earning -$1.66 versus -$2.38 in the prior year. This year, the market expects an improvement in earnings ($0.20 versus -$1.66).
- 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 Oil, Gas & Consumable Fuels industry average. The net income increased by 0.4% when compared to the same quarter one year prior, going from -$13.03 million to -$12.98 million.
- You can view the full analysis from the report here: FRO Ratings Report