Story updated at 10 a.m. to reflect market activity.
Arris Group gained 14.4% to $29.42 in morning trading.
The firm reiterated its "equal weight" rating for the company. Barclays analysts said Arris' new product and refresh cycle are driving strong demand.
Separately, TheStreet Ratings team rates ARRIS GROUP INC as a Hold with a ratings score of C+. TheStreet Ratings Team has this to say about their recommendation:
"We rate ARRIS GROUP INC (ARRS) 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 robust revenue growth, good cash flow from operations and solid stock price performance. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, disappointing return on equity and poor profit margins."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- ARRS's very impressive revenue growth greatly exceeded the industry average of 3.5%. Since the same quarter one year prior, revenues leaped by 248.6%. 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.
- Compared to its closing price of one year ago, ARRS's share price has jumped by 64.05%, exceeding the performance of the broader market during that same time frame. Although ARRS had significant growth over the past year, our hold rating indicates that we do not recommend additional investment in this stock at the current time.
- The gross profit margin for ARRIS GROUP INC is currently lower than what is desirable, coming in at 25.05%. It has decreased significantly from the same period last year. Along with this, the net profit margin of -0.23% is significantly below that of the industry average.
- The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Communications Equipment industry. The net income has significantly decreased by 119.0% when compared to the same quarter one year ago, falling from $14.80 million to -$2.82 million.
- You can view the full analysis from the report here: ARRS Ratings Report