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Analysts' Actions: Alliance Data, AMD, Colfax, Nu Skin, RealPage

NEW YORK (TheStreet) -- RATINGS CHANGES

Alliance Data (ADS) was downgraded at Robert Baird to neutral from outperform. Valuation call, based on a 12-month price target of $287, Robert Baird said.

Advanced Micro Devices (AMD - Get Report) was downgraded at Bank of America/Merrill Lynch to underperform from neutral. Twelve-month price target is $4. Legacy PC and graphics businesses continue to be a drag, Bank of America/Merrill Lynch said.

Brunswick (BC) was upgraded at B. Riley to buy from neutral. Twelve-month price target is $52. Business divestitures leave a solid core business, B. Riley said.

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eBay (EBAY) was upgraded to buy at TheStreet Ratings.

Colfax (CFX) was upgraded at Stifel Nicolaus to buy from hold. Twelve-month price target is $80. Company can achieve margin targets in a difficult operating environment, Stifel Nicolaus said.

Iron Mountain (IRM) was downgraded at Robert Baird to neutral from outperform. Twelve-month price target is $39. Company has a lower growth profile and equity dilution remains possible, Baird said.

MercadoLibre (MELI) was upgraded to buy at TheStreet Ratings.

Nu Skin (NUS) was downgraded at Bank of America/Merrill Lynch to underperform from neutral. Twelve-month price target is $63. Estimates were also cut, given low visibility of a potential turnaround, Bank of America/Merrill Lynch said.

RealPage (RP - Get Report) was downgraded at William Blair to underperform. Unpredictable revenue will likely weigh on the shares, William Blair said.

RealPage was downgraded at JMP Securities to market perform from underperform. Estimates were also cut, given the company's new guidance, JMP Securities 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 REALPAGE INC as a Hold with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:

"We rate REALPAGE INC (RP) 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 revenue growth, good cash flow from operations and expanding profit margins. However, as a counter to these strengths, we find that the growth in the company's net income has been quite unimpressive."

Highlights from the analysis by TheStreet Ratings Team goes as follows:
  • RP's revenue growth has slightly outpaced the industry average of 8.2%. Since the same quarter one year prior, revenues rose by 13.0%. 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.
  • Net operating cash flow has increased to $23.63 million or 37.32% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of 10.73%.
  • RP's debt-to-equity ratio is very low at 0.00 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Although the company had a strong debt-to-equity ratio, its quick ratio of 0.99 is somewhat weak and could be cause for future problems.
  • 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. In comparison to the other companies in the Software industry and the overall market, REALPAGE INC's return on equity is significantly below that of the industry average and is below that of the S&P 500.
  • 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 Software industry. The net income has significantly decreased by 182.1% when compared to the same quarter one year ago, falling from $1.02 million to -$0.84 million.

TheStreet Ratings team rates ALLIANCE DATA SYSTEMS CORP as a Buy with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation:

"We rate ALLIANCE DATA SYSTEMS CORP (ADS) a BUY. This is driven by multiple strengths, 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, growth in earnings per share, increase in net income, good cash flow from operations and solid stock price performance. We feel these strengths outweigh the fact that the company has had generally high debt management risk by most measures that we evaluated."

Highlights from the analysis by TheStreet Ratings Team goes as follows:
  • The revenue growth greatly exceeded the industry average of 16.1%. Since the same quarter one year prior, revenues rose by 17.0%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • ALLIANCE DATA SYSTEMS CORP has improved earnings per share by 8.3% 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 two years. We feel that this trend should continue. During the past fiscal year, ALLIANCE DATA SYSTEMS CORP increased its bottom line by earning $7.43 versus $6.60 in the prior year. This year, the market expects an improvement in earnings ($12.32 versus $7.43).
  • The net income growth from the same quarter one year ago has exceeded that of the S&P 500 and greatly outperformed compared to the IT Services industry average. The net income increased by 6.5% when compared to the same quarter one year prior, going from $128.98 million to $137.40 million.
  • Net operating cash flow has increased to $333.11 million or 19.39% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of -19.37%.
  • Investors have apparently begun to recognize positive factors similar to those we have mentioned in this report, including earnings growth. This has helped drive up the company's shares by a sharp 49.95% over the past year, a rise that has exceeded that of the S&P 500 Index. Looking ahead, the stock's sharp rise over the last year has already helped drive it to a level which is relatively expensive compared to the rest of its industry. We feel, however, that other strengths this company displays justify these higher price levels.

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