Story updated at 9:50 a.m. to reflect market activity.
Spansion gained 1.9% to $20.91 in morning trading.
The analyst firm reiterated its "hold" rating for the chipmaker. The increase was driven by margin expansion from higher fab utilization and new products.
Separately, TheStreet Ratings team rates SPANSION INC as a Hold with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:
"We rate SPANSION INC (CODE) 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, solid stock price performance and good cash flow from operations. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, disappointing return on equity and feeble growth in the company's earnings per share."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- CODE's very impressive revenue growth greatly exceeded the industry average of 3.2%. Since the same quarter one year prior, revenues leaped by 64.4%. 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.
- Compared to its closing price of one year ago, CODE's share price has jumped by 51.82%, exceeding the performance of the broader market during that same time frame. Although CODE 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.
- 37.25% is the gross profit margin for SPANSION INC which we consider to be strong. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of -7.21% is in-line with 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 Semiconductors & Semiconductor Equipment industry. The net income has significantly decreased by 55.8% when compared to the same quarter one year ago, falling from -$14.44 million to -$22.50 million.
- Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Semiconductors & Semiconductor Equipment industry and the overall market, SPANSION 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: CODE Ratings Report