NEW YORK (TheStreet) -- Shares of MeetMe Inc. (MEET - Get Report) are higher by 9.84% to $2.12 in early trading on Wednesday morning after being initiated with a "buy" rating and $4.50 price target at Wunderlich Securities.
The firm said it started the social media company, geared toward helpings users meet new people, with a strong rating based on its expectation MeetMe will increase its number of active mobile users, its monetization levels, and its 2015 full year revenue through enhancements in its mobile app, advertising deals and expanding trends with younger users.
"We rate MEETME INC (MEET) a SELL. This is driven by several weaknesses, which we believe should have a greater impact than any strengths, and could make it more difficult for investors to achieve positive results compared to most of the stocks we cover. The area that we feel has been the company's primary weakness has been its disappointing return on equity."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
Separately, TheStreet Ratings team rates MEETME INC as a Sell with a ratings score of D+. TheStreet Ratings Team has this to say about their recommendation:
- Current return on equity exceeded its ROE from the same quarter one year prior. This is a clear sign of strength within the company. Compared to other companies in the Internet Software & Services industry and the overall market, MEETME INC's return on equity significantly trails that of both the industry average and the S&P 500.
- MEETME INC reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, MEETME INC reported poor results of -$0.29 versus -$0.18 in the prior year. This year, the market expects an improvement in earnings (-$0.21 versus -$0.29).
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Internet Software & Services industry. The net income increased by 53.3% when compared to the same quarter one year prior, rising from -$7.33 million to -$3.42 million.
- This stock has increased by 32.45% over the past year, outperforming the rise in the S&P 500 Index during the same period. Regarding the future course of this stock, we feel that the risks involved in investing in MEET do not compensate for any future upside potential, despite the fact that it has seen nice gains over the past 12 months.
- Although MEET's debt-to-equity ratio of 0.07 is very low, it is currently higher than that of the industry average. To add to this, MEET has a quick ratio of 1.58, which demonstrates the ability of the company to cover short-term liquidity needs.
- You can view the full analysis from the report here: MEET Ratings Report