NEW YORK (TheStreet) -- JDS Uniphase (JDSU) has been downgraded to "sector perform" from "outperform," RBC Capital said Friday. The firm said the ratings revision was a valuation call based on a $15 price target.
Separately, TheStreet Ratings team rates JDS UNIPHASE CORP as a Hold with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:
"We rate JDS UNIPHASE CORP (JDSU) a HOLD. The primary factors that have impacted our rating are mixed ? some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its revenue growth, impressive record of earnings per share growth and compelling growth in net income. However, as a counter to these strengths, we also find weaknesses including weak operating cash flow and relatively poor performance when compared with the S&P 500 during the past year."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- JDSU's revenue growth has slightly outpaced the industry average of 1.1%. Since the same quarter one year prior, revenues slightly increased by 4.2%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- JDS UNIPHASE CORP reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past year. We feel that this trend should continue. This trend suggests that the performance of the business is improving. During the past fiscal year, JDS UNIPHASE CORP turned its bottom line around by earning $0.24 versus -$0.11 in the prior year. This year, the market expects an improvement in earnings ($0.59 versus $0.24).
- Despite currently having a low debt-to-equity ratio of 0.42, it is higher than that of the industry average, inferring that management of debt levels may need to be evaluated further. Even though the debt-to-equity ratio shows mixed results, the company's quick ratio of 3.76 is very high and demonstrates very strong liquidity.
- In its most recent trading session, JDSU has closed at a price level that was not very different from its closing price of one year earlier. This is probably due to its weak earnings growth as well as other mixed factors. We feel that the combination of its price rise over the last year and its current price-to-earnings ratio relative to its industry tend to reduce its upside potential.
- Net operating cash flow has declined marginally to $54.40 million or 8.41% when compared to the same quarter last year. In addition, when comparing the cash generation rate to the industry average, the firm's growth is significantly lower.
- You can view the full analysis from the report here: JDSU Ratings Report