Have Markets Sold Off Too Soon on York Water Co (NASDAQ:YORW)?

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York Water

York Water Co (NASDAQ:YORW) is down on lats week’s open, primarily based on an analyst downgrade. Is it too soon to be bearish in the space, however?

 

Pennsylvania-based water treatment company York Water Co (NASDAQ:YORW) opened last week at a little over $33 a share. By Friday close, the company traded for less than $29 a share – a 13% decline across the period. The decline comes on the back of a downgrade by a well-respected research organization, and highlights York Water as a potential bearish allocation as we head into a fresh week’s trading. There may be another side to the story, however. Here is a look at the specifics of the downgrade, and what it means for the company going forward.

The organization in question is Hilliard Lyons. Having previously held York a neutral rating, Hilliard downgraded the company to an underperform rating based on the recent release of its final quarter 2015 financials. Despite the downgrade, however, financials look pretty strong. The company recorded a fourth-quarter net gain of $3.5 million on $11.6 million revenues, and brought in  a net income of $12.5 million for the full year, on $47.1 million worth of revenue.

A number of analysts have noted these games, and what look to be solid bottom-line figures, and issued an opposite rating to that of Hilliard.

One example is Zacks, which just upgraded York from a hold to a strong buy, rooted primarily in the data. Zacks also cited high levels of internal investment as a driving factor behind its reevaluation.

So, with seemingly contradictory analyst opinions, what can we look for from York to help form a bias on either side of the market?

With the fundamentals in place, we are looking primarily at the technical side of the equation as an indication of the company’s near-term performance. We expect markets to fall in line with the second of the two discussed analyst expectations, and in turn, York’s share price to close the gap and run back up towards the $33-35 mark before the close of this week.

One to watch.

 

DISCLAIMER: There is a substantial risk of loss with any speculative asset, especially small cap stocks. The opinions expressed are those of the author, and do not constitute recommendations to buy or sell a stock. Do your own research before committing capital.