NEW YORK (TheStreet) -- BroadSoft (BSFT - Get Report) shares closed trading up 0.7% to $24.26 on Tuesday after having its price target increased to $33 from $27 by analysts at Cowen and Company who cited the company's strong full year guidance as a reason for the more optimistic outlook.
The firm maintained its "outperform" rating on the stock.
Separately, TheStreet Ratings team rates BROADSOFT INC as a Sell with a ratings score of D+. TheStreet Ratings Team has this to say about their recommendation:
"We rate BROADSOFT INC (BSFT) a SELL. This is driven by a few notable 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 company's weaknesses can be seen in multiple areas, such as its deteriorating net income, disappointing return on equity, generally disappointing historical performance in the stock itself and feeble growth in its earnings per share."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- 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 221.6% when compared to the same quarter one year ago, falling from -$2.32 million to -$7.45 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 Software industry and the overall market, BROADSOFT INC's return on equity significantly trails that of both the industry average and the S&P 500.
- The share price of BROADSOFT INC has not done very well: it is down 18.24% and has underperformed the S&P 500, in part reflecting the company's sharply declining earnings per share when compared to the year-earlier quarter. Turning toward the future, the fact that the stock has come down in price over the past year should not necessarily be interpreted as a negative; it could be one of the factors that may help make the stock attractive down the road. Right now, however, we believe that it is too soon to buy.
- BROADSOFT INC 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. The company has reported a trend of declining earnings per share over the past two years. However, the consensus estimate suggests that this trend should reverse in the coming year. During the past fiscal year, BROADSOFT INC swung to a loss, reporting -$0.31 versus $0.43 in the prior year. This year, the market expects an improvement in earnings ($1.28 versus -$0.31).
- The gross profit margin for BROADSOFT INC is currently very high, coming in at 78.18%. Regardless of BSFT's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, BSFT's net profit margin of -16.96% significantly underperformed when compared to the industry average.
- You can view the full analysis from the report here: BSFT Ratings Report