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Analysts' Actions: El Pollo Loco, Jazz Pharmaceuticals, SolarCity

NEW YORK (TheStreet) -- RATINGS CHANGES

Brinker (EAT) was upgraded at Wunderlich to buy from hold. Twelve-month price target is $55. Company is leveraged to strong industry comp sales trends, Wunderlich said.

Domino's Pizza (DPZ) was upgraded to buy at TheStreet Ratings.

Goldcorp (GG) was upgraded to hold at TheStreet Ratings.

Ingersoll-Rand (IR) was downgraded at Robert Baird to neutral from outperform. Twelve-month price target is $65. Company is shifting focus from buybacks to M&A, which adds integration risk, Baird said.

El Pollo Loco (LOCO) was initiated with an outperform rating at William Blair. Company can generate midteens annual earnings growth over the next three years as it expands its store base, William Blair said.

El Pollo Loco was initiated with an underweight rating at Morgan Stanley. Valuation call, based on a 12-month price target of $22, Morgan Stanley said.

Jazz Pharmaceuticals (JAZZ) was initiated with an overweight rating and 12-month price target of $190 at J.P. Morgan. Company is well positioned for organic growth or the possibility of an acquisition, J.P. Morgan said.

SolarCity (SCTY - Get Report) was downgraded at Robert Baird to neutral from outperform. Valuation call, given the rapid rise in the stock, Robert Baird said.

Wolverine World Wide (WWW) was upgraded at Keybanc to buy. Twelve-month price target is $30. Company can improve margins and generate solid free cash flow, Keybanc said.

Editor's note: To see analysts' stock comments and changes to price targets and earnings estimates, go to "Street Notes" which is available only to Real Money subscribers. To find out how to become a subscriber, please click here.

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Now let's look at TheStreet Ratings' take on some of these stocks.

TheStreet Ratings team rates SOLARCITY CORP as a Sell with a ratings score of D+. TheStreet Ratings Team has this to say about their recommendation:

"We rate SOLARCITY CORP (SCTY) a SELL. This is driven by a few notable 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 unimpressive growth in net income, generally high debt management risk, weak operating cash flow and feeble growth in its earnings per share."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Electrical Equipment industry. The net income has decreased by 20.8% when compared to the same quarter one year ago, dropping from -$39.46 million to -$47.65 million.
  • The debt-to-equity ratio of 1.48 is relatively high when compared with the industry average, suggesting a need for better debt level management. Along with the unfavorable debt-to-equity ratio, SCTY maintains a poor quick ratio of 0.93, which illustrates the inability to avoid short-term cash problems.
  • Net operating cash flow has significantly decreased to -$36.49 million or 149.27% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
  • SOLARCITY CORP reported flat earnings per share in the most recent quarter. Earnings per share have declined over the last year. We anticipate that this should continue in the coming year. During the past fiscal year, SOLARCITY CORP reported poor results of -$0.80 versus -$0.56 in the prior year. For the next year, the market is expecting a contraction of 406.3% in earnings (-$4.05 versus -$0.80).
  • 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 Electrical Equipment industry and the overall market, SOLARCITY CORP's return on equity significantly trails that of both the industry average and the S&P 500.

TheStreet Ratings team rates JAZZ PHARMACEUTICALS PLC as a Buy with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation:

"We rate JAZZ PHARMACEUTICALS PLC (JAZZ) a BUY. This is driven by a few notable 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 robust revenue growth, increase in net income, good cash flow from operations, expanding profit margins and largely solid financial position with reasonable debt levels by most measures. We feel these strengths outweigh the fact that the company has had somewhat disappointing return on equity."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • The revenue growth greatly exceeded the industry average of 4.5%. Since the same quarter one year prior, revenues rose by 39.8%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • 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 Pharmaceuticals industry average. The net income increased by 3.5% when compared to the same quarter one year prior, going from $42.19 million to $43.66 million.
  • Net operating cash flow has significantly increased by 759.31% to $74.92 million when compared to the same quarter last year. In addition, JAZZ PHARMACEUTICALS PLC has also vastly surpassed the industry average cash flow growth rate of -3.89%.
  • The gross profit margin for JAZZ PHARMACEUTICALS PLC is currently very high, coming in at 90.94%. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of 14.99% trails the industry average.
  • Investors have apparently begun to recognize positive factors similar to those we have mentioned in this report, including earnings growth. This has helped drive up the company's shares by a sharp 78.23% over the past year, a rise that has exceeded that of the S&P 500 Index. Looking ahead, the stock's sharp rise over the last year has already helped drive it to a level which is relatively expensive compared to the rest of its industry. We feel, however, that other strengths this company displays justify these higher price levels.
This article was written by a staff member of TheStreet.

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