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Analysts' Actions: International Paper, Marvell, VMware, Vectren

NEW YORK (TheStreet) -- RATINGS CHANGES

United Breweries (CCU) was downgraded to hold at TheStreet Ratings.

International Paper (IP - Get Report) was downgraded at RBC Capital to sector perform from outperform. There is downside risk to container-board prices, RBC Capital said.

Louisiana-Pacific (LPX) was downgraded at RBC Capital to sector perform from outperform. Twelve-month price target is $16. Company will be hurt by lower OSB prices, RBC Capital said.

Investing 101: Refine Your Research and Focus, Focus, Focus

Greenberg: Maybe It Wasn't the Weather, After All

Marvell (MRVL - Get Report) was downgraded at Oppenheimer to underperform from perform. Company is facing mounting headwinds, Oppenheimer said.

Red Hat (RHT) was upgraded to buy at TheStreet Ratings.

VMware (VMW) was downgraded at Wells Fargo to market perform from outperform. Company will struggle to meet consensus expectations in the coming quarters, Wells Fargo said.

Vectren (VVC) was downgraded at Keybanc to hold from buy. Coal mining sale will be dilutive to earnings, Keybanc said.

Editor's note: To see analysts' stock comments and changes to price targets and earnings estimates, go to "Street Notes" which is available only to Real Money subscribers. To find out how to become a subscriber, please click here.

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Now let's look at TheStreet Ratings' take on some of these stocks: TheStreet Ratings team rates INTL PAPER CO as a Buy with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation:

"We rate INTL PAPER CO (IP) a BUY. This is driven by some important positives, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its increase in stock price during the past year and notable return on equity. We feel these strengths outweigh the fact that the company has had sub par growth in net income."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • Compared to where it was 12 months ago, the stock is up, but it has so far lagged the appreciation in the S&P 500. Looking ahead, unless broad bear market conditions prevail, we still see more upside potential for this stock, despite the fact that it has already risen over the past year.
  • INTL PAPER CO has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from 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, INTL PAPER CO increased its bottom line by earning $3.01 versus $1.71 in the prior year. This year, the market expects an improvement in earnings ($3.55 versus $3.01).
  • The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Paper & Forest Products industry and the overall market on the basis of return on equity, INTL PAPER CO has outperformed in comparison with the industry average, but has underperformed when compared to that of the S&P 500.
  • Regardless of the drop in revenue, the company managed to outperform against the industry average of 7.0%. Since the same quarter one year prior, revenues slightly dropped by 1.1%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • The debt-to-equity ratio of 1.24 is relatively high when compared with the industry average, suggesting a need for better debt level management. Even though the debt-to-equity ratio is weak, IP's quick ratio is somewhat strong at 1.05, demonstrating the ability to handle short-term liquidity needs.

TheStreet Ratings team rates MARVELL TECHNOLOGY GROUP LTD as a Buy with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation:

"We rate MARVELL TECHNOLOGY GROUP LTD (MRVL) a BUY. This is driven by some important positives, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its robust revenue growth, largely solid financial position with reasonable debt levels by most measures, solid stock price performance, impressive record of earnings per share growth and compelling growth in net income. Although the company may harbor some minor weaknesses, we feel they are unlikely to have a significant impact on results."

Highlights from the analysis by TheStreet Ratings Team goes as follows:
  • The revenue growth came in higher than the industry average of 2.9%. Since the same quarter one year prior, revenues rose by 30.4%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • MRVL has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign. Along with this, the company maintains a quick ratio of 3.37, which clearly demonstrates the ability to cover short-term cash needs.
  • Compared to where it was a year ago today, the stock is now trading at a higher level, reflecting both the market's overall trend during that period and the fact that the company's earnings growth has been robust. 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.
  • MARVELL TECHNOLOGY GROUP LTD reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past year. We feel that this trend should continue. During the past fiscal year, MARVELL TECHNOLOGY GROUP LTD increased its bottom line by earning $0.64 versus $0.53 in the prior year. This year, the market expects an improvement in earnings ($1.16 versus $0.64).
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Semiconductors & Semiconductor Equipment industry. The net income increased by 87.0% when compared to the same quarter one year prior, rising from $53.21 million to $99.48 million.

This article was written by a staff member of TheStreet.

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