NEW YORK (TheStreet) -- Mercer International (MERC - Get Report) shares were upgraded to "outperform" from "sector perform" by analysts at RBC Capital, who raised the company's price target to $14 from $10.
Mercer International shares are up 2.4% to $10.33 in early market trading on Tuesday.
Separately, TheStreet Ratings team rates MERCER INTL INC as a Hold with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:
"We rate MERCER INTL INC (MERC) 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, solid stock price performance and compelling growth in net income. However, as a counter to these strengths, we also find weaknesses including generally higher debt management risk and poor profit margins."
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 20.3%. Growth in the company's revenue appears to have helped boost the earnings per share.
- Powered by its strong earnings growth of 3800.00% and other important driving factors, this stock has surged by 43.93% over the past year, outperforming the rise in the S&P 500 Index during the same period. Regarding the stock's future course, our hold rating indicates that we do not recommend additional investment in this stock despite its gains in the past year.
- MERCER INTL 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, MERCER INTL INC reported poor results of -$0.47 versus -$0.28 in the prior year. This year, the market expects an improvement in earnings ($0.69 versus -$0.47).
- The gross profit margin for MERCER INTL INC is rather low; currently it is at 22.70%. Regardless of MERC's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, MERC's net profit margin of 6.88% compares favorably to the industry average.
- The debt-to-equity ratio is very high at 2.56 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. Regardless of the company's weak debt-to-equity ratio, MERC has managed to keep a strong quick ratio of 1.74, which demonstrates the ability to cover short-term cash needs.
- You can view the full analysis from the report here: MERC Ratings Report