NEW YORK (TheStreet) -- Bank of America/Merrill Lynch downgraded Itron (ITRI - Get Report) to "underperform" from "buy" and set a $39 price target. The firm said the company is facing increased growth risks.
The stock closed at $41.50 on Friday.
TheStreet Ratings team rates ITRON INC as a "hold" with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:
"We rate ITRON INC (ITRI) 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 also find weaknesses including deteriorating net income, disappointing return on equity and a generally disappointing performance in the stock itself."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- Despite its growing revenue, the company underperformed as compared with the industry average of 9.4%. Since the same quarter one year prior, revenues slightly increased by 6.1%. 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 significantly increased by 11120.33% to $66.76 million when compared to the same quarter last year. In addition, ITRON INC has also vastly surpassed the industry average cash flow growth rate of 66.63%.
- 35.61% is the gross profit margin for ITRON 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 -0.05% trails 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 Electronic Equipment, Instruments & Components industry. The net income has significantly decreased by 109.9% when compared to the same quarter one year ago, falling from $2.57 million to -$0.25 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 Electronic Equipment, Instruments & Components industry and the overall market, ITRON 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: ITRI Ratings Report