Story updated at 10 a.m. to reflect market activity.
CareFusion gained 0.7% to $39.65 in morning trading.
The firm reiterated its "equal weight" rating for the stock. Barclays analysts said the decrease was due to lighter revenue, which is driven by weakness in the Medical Systems segment.Must read: Warren Buffett's 10 Favorite Growth Stocks SELL NOW: If you own any of the 900 stocks that TheStreet Quant Ratings has identified as a 'Sell'...you could potentially lose EVERYTHING in the next 6-12 months. Learn more. --------------- Separately, TheStreet Ratings team rates CAREFUSION CORP as a Buy with a ratings score of A. TheStreet Ratings Team has this to say about their recommendation: "We rate CAREFUSION CORP (CFN) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures, reasonable valuation levels, good cash flow from operations and increase in stock price during the past year. 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:
- Despite its growing revenue, the company underperformed as compared with the industry average of 2.8%. Since the same quarter one year prior, revenues slightly increased by 1.4%. 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.
- CFN's debt-to-equity ratio is very low at 0.27 and is currently below that of the industry average, implying that there has been very successful management of debt levels. To add to this, CFN has a quick ratio of 1.95, which demonstrates the ability of the company to cover short-term liquidity needs.
- Net operating cash flow has increased to $223.00 million or 24.58% when compared to the same quarter last year. In addition, CAREFUSION CORP has also vastly surpassed the industry average cash flow growth rate of -25.99%.
- Compared to where it was a year ago today, the stock is now trading at a higher level, regardless of the company's weak earnings results. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
- You can view the full analysis from the report here: CFN Ratings Report
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