TheStreet.com Ratings: Stock Upgrades, Downgrades

Each weekday, TheStreet.com Ratings updates its ratings on the stocks we cover. Our model projects a stock's total return potential over a 12-month period, including both price appreciation and dividends. Our buy, hold or sell ratings designate how we expect these stocks to perform against a general benchmark of the equities market and interest rates.

While our model is quantitative, it uses both subjective and objective elements. For instance, subjective elements include expected equities market returns, future interest rates, implied industry outlook and forecasted company earnings. Objective elements include volatility of past operating revenue, financial strength and company cash flows.

Some recent rating changes are highlighted below.

Insurance broker Brooke(BXXX Quote) has been downgraded to a hold from a buy. Although revenues were up in the fourth quarter of fiscal 2006 compared with the same quarter a year ago, the growth has not trickled down to the bottom line. Earnings per share fell over the same time period. In spite of this, the company's stock continues to trade at a higher price-to-earnings ratio than the insurance industry average. TheStreet.com Ratings feels this will limit the future upside potential of this stock. Brooke had been rated a buy since August 2006.

Insurance industry software developer Ebix(EBIX Quote) has been downgraded to a hold from a buy. TheStreet.com Ratings feels this company has weak liquidity and may be unable to cover short-term cash needs. Currently, Ebix's quick ratio, a measurement comparing the company's noninventory assets with its liabilities, stands at just 0.7. Ebix had been rated a buy since October 2006.