Update (9:45 a.m.): Updated with Friday market open information.
NEW YORK (TheStreet) -- UBS raised its target price on AOL (AOL) to $54 and set a "buy" rating. The firm cited strong third-party networks growth and low churn in subscription business as the reasons for the increase.
The stock was down 3.22% to $45.63 shortly after the market opened on Friday.
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Separately, TheStreet Ratings team rates AOL INC as a "buy" with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation:
"We rate AOL INC (AOL) a BUY. This is driven by several positive factors, 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 solid stock price performance, revenue growth, largely solid financial position with reasonable debt levels by most measures and reasonable valuation levels. We feel these strengths outweigh the fact that the company has had sub par growth in net income."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- Compared to its closing price of one year ago, AOL's share price has jumped by 52.74%, exceeding the performance of the broader market during that same time frame. Regarding the stock's future course, although almost any stock can fall in a broad market decline, AOL should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
- AOL's revenue growth trails the industry average of 17.2%. Since the same quarter one year prior, revenues slightly increased by 5.6%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
- Although AOL's debt-to-equity ratio of 0.04 is very low, it is currently higher than that of the industry average. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.15, which illustrates the ability to avoid short-term cash problems.
- AOL INC has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. This company has reported somewhat volatile earnings recently. We feel it is likely to report a decline in earnings in the coming year. During the past fiscal year, AOL INC increased its bottom line by earning $11.02 versus $0.14 in the prior year. For the next year, the market is expecting a contraction of 81.5% in earnings ($2.04 versus $11.02).
- You can view the full analysis from the report here: AOL Ratings Report