NEW YORK (TheStreet) -- HomeAway (AWAY - Get Report) shares are falling, down -2.88% to $30.30, in pre-market trading on Thursday following a downgrade to "neutral" from "overweight" by analysts at JPMorgan (JPM - Get Report).
The firm lowered its price target on the shares by 22% to $38 from $49.
JPMorgan cited increased spending on marketing as a reason for the lowered outlook.
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Separately, TheStreet Ratings team rates HOMEAWAY INC as a Hold with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:
"We rate HOMEAWAY INC (AWAY) 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, expanding profit margins and good cash flow from operations. However, as a counter to these strengths, we also find weaknesses including deteriorating net income and disappointing return on equity."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The revenue growth came in higher than the industry average of 4.3%. Since the same quarter one year prior, revenues rose by 33.0%. 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.
- The gross profit margin for HOMEAWAY INC is currently very high, coming in at 85.96%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 4.20% is above that of the industry average.
- Net operating cash flow has slightly increased to $39.97 million or 6.63% when compared to the same quarter last year. Despite an increase in cash flow, HOMEAWAY INC's average is still marginally south of the industry average growth rate of 16.41%.
- 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 Internet & Catalog Retail industry. The net income has decreased by 16.1% when compared to the same quarter one year ago, dropping from $5.30 million to $4.44 million.
- The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. Compared to other companies in the Internet & Catalog Retail industry and the overall market, HOMEAWAY INC's return on equity significantly trails that of both the industry average and the S&P 500.
- You can view the full analysis from the report here: AWAY Ratings Report