Each weekday, TheStreet.com Ratings updates its ratings on the stocks it covers. The proprietary ratings model projects a stock's total return potential over a 12-month period, including both price appreciation and dividends. Buy, hold or sell ratings designate how the Ratings group expects these stocks to perform against a general benchmark of the equities market and interest rates.
While the ratings 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 company earnings forecasts. Objective elements include volatility of past operating revenue, financial strength and company cash flows.
Akamai Technologies (AKAM - Get Report), a content delivery company, has been downgraded to hold. While the company enjoys a largely solid financial position with reasonable debt and valuation levels and robust revenue growth, return on equity and stock performance have both been disappointing. Second-quarter revenue climbed 52% to $152.7 million. The company's stock share price has done poorly compared with a year ago, falling 33.97%. Even with the heavy decline in its share price, this stock is still more expensive (when compared to its current earnings) than most other companies in its industry. Akamai Technologies had been rated buy since October 2005.
Lattice Semiconductor (LSCC - Get Report), which makes programmable chips, has been upgraded to hold. The company's financial position is solid, with reasonable debt levels, expanding profit margins and notable return on equity. However Lattice financial performance has also been marked by unimpressive growth in net income, weak operating cash flow and the performance of the stock price itself has also been generally disappointing. The company posted a second-quarter loss of $1.5 million, or 1 cent a share, compared with a profit of $2.1 million, or 2 cents a share, a year ago. The second-quarter loss was narrower than in the first quarter, however, and TheStreet.com Ratings believes the company is poised for earnings-per-share growth in the coming year. Lattice Semiconductor had been rated sell since April.