Boston, MA 10/07/2014 (wallstreetpr) – Shares of OGE Energy Corp. (NYSE:OGE) and Legacy Reserves LP (NASDAQ:LGCY) were upgraded by Wunderlich Securities. However, the brokerage lifted the price objective for OGE Energy only and reiterated for Legacy Reserves.
Rating Upgraded
Wunderlich Securities has upgraded its rating on OGE Energy Corp. (NYSE:OGE) shares to a rating of Buy from Hold while effecting a similar rating for Legacy Reserves shares, Benzinga reported.
The brokerage said that it hosted a number of investors meetings with OGE Energy senior management and were increasingly confident of the company’s potential to outperform its peers. Its analyst, Mike Bates, said that investors have also recognized the acceleration of likely cash flow from Enable that continued to expand in important energy markets. He also said that he expects initial payment from IDRs by next year end.
The analyst believes that OGE Energy Corp. (NYSE:OGE)’s strong cash flow would favorably help a 10% Plus annual dividend growth. Besides, the cash flow would also fund its base growth rate at the utility till 2019 without going for an external equity issue.
Legacy Reserves
Wunderlinch analyst, Abhishek Sinha, said that he has upgraded the shares of Legacy Reserves since he sees the recent pullback in share prices a solid buying opportunity. He said that the valuation looked attractive with a potential to provide 22% return.
The company has recently issued 11.5 million units through public offering apart from 1.5 million units as underwriter’s option. The issue generated $270 million as net proceeds. As a result, its liquidity has enhanced. Therefore, the analyst believes that Legacy Reserves would have enough money to indulge in big scale acquisition to fuel production and distribution. The company has more than $900 million in liquidity.
Price Target
Wunderlinch Securities has boosted its price objective on OGE Energy Corp. (NYSE:OGE) shares to $44 from $39. The revised target was derived from $24 from Utility, $15 from ENBL LP units, and $5 from GP IDRs.
However, for Legacy Reserves shares, the brokerage reiterated the price tag of $31.00.
