NEW YORK (TheStreet) -- Shares of Marathon Oil (MRO - Get Report) were up in late afternoon trading on Friday as Canaccord Genuity initiated coverage of the stock with a "hold" rating and $16 price target earlier today.
The firm noted that the Houston-based oil and gas company has an "improved" balance sheet following divestures of noncore assets.
Canaccord said that Marathon has a "relentless" focus on reducing costs. The company's initial capital expenditures budget this year was $1.4 billion, down 50% and 75% from 2014 and 2015, respectively, the firm said.
In the second quarter, "driven by efficiencies," Marathon reduced its outlook for capital expenditures for 2016 to $1.3 billion, the firm added.
"We are modeling the company to be cash flow positive on an operating basis with production flat in 2017 and 2018," Canaccord said.
But the firm added that "given the operational leverage to oil and gas prices, being unhedged makes us cautious."
Additionally, oil prices were mixed this afternoon after Baker Hughes reported that U.S. drillers added 7 rigs last week to total 425 active rigs.
The rig count dampened bullish sentiment from earlier this week after OPEC members agreed to cap crude production levels.
Crude oil was up 0.56% to $48.10 per barrel but Brent crude was down 0.39% to $49.05 per barrel this afternoon.
Separately, TheStreet Ratings objectively rated this stock according to its "risk-adjusted" total return prospect over a 12-month investment horizon. Not based on the news in any given day, the rating may differ from Jim Cramer's view or that of this articles's author.
TheStreet Ratings rated this stock as a "sell" with a ratings score of D.
The company's weaknesses can be seen in multiple areas, such as its weak operating cash flow, generally disappointing historical performance in the stock itself and disappointing return on equity.
You can view the full analysis from the report here: MRO