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Analysts' Actions: Cepheid, Pepsico, Southwest Gas and More

Stocks in this article: PEP CPHD SWX HII

Oasis Petroleum (OAS) was upgraded at Sterne Agee to buy. Twelve-month price target is $59. Selloff appears overdone and margin visibility is improving, Sterne Agee said.

Oshkosh (OSK) was downgraded at J.P. Morgan to neutral. Expect to see a mixed result in construction stocks, J.P. Morgan said. Twelve-month price target was lowered to $49.

Pepsico (PEP) was upgraded at UBS to buy from neutral. Company is the top pick in large-cap beverage group based on fundamental momentum, UBS said.

Read More: Americans Still Hate Airline Bag Fees, and Most Lack a Preferred Airline

Southwest Gas (SWX) was upgraded at Brean Capital to buy from hold. Twelve-month price target is $54. Company reported a strong quarter, against difficult comps, Brean Capital said.

Teekay (TK) was downgraded to hold at TheStreet Ratings.

Tesla (TSLA) was upgraded at Deutsche Bank to buy. Twelve-month price target is $310. Company can deliver steeper growth, Deutsche Bank said.

Walmart (WMT) was downgraded at Jefferies to hold from buy. Concerns about ROI in various business units, Jefferies said. Twelve-month price target was lowered to $76.

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 PEPSICO INC as a Buy with a ratings score of A+. TheStreet Ratings Team has this to say about their recommendation:

"We rate PEPSICO INC (PEP) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its revenue growth, good cash flow from operations, growth in earnings per share, expanding profit margins and increase in stock price during the past year. 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:

  • Despite its growing revenue, the company underperformed as compared with the industry average of 4.5%. Since the same quarter one year prior, revenues slightly increased by 0.5%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • Net operating cash flow has slightly increased to $2,491.00 million or 7.69% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of -2.58%.
  • PEPSICO INC reported flat earnings per share in the most recent quarter. 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, PEPSICO INC increased its bottom line by earning $4.32 versus $3.92 in the prior year. This year, the market expects an improvement in earnings ($4.58 versus $4.32).
  • The gross profit margin for PEPSICO INC is rather high; currently it is at 57.56%. 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 11.70% trails the industry average.
  • The stock price has risen over the past year, but, despite its earnings growth and some other positive factors, it has underperformed the S&P 500 so far. 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.

TheStreet Ratings team rates CEPHEID INC as a Hold with a ratings score of C-. TheStreet Ratings Team has this to say about their recommendation:

"We rate CEPHEID INC (CPHD) 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 robust 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 feeble growth in the company's earnings per share."

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

  • CPHD's revenue growth trails the industry average of 41.0%. Since the same quarter one year prior, revenues rose by 21.3%. 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 246.92% to $8.30 million when compared to the same quarter last year. In addition, CEPHEID INC has also vastly surpassed the industry average cash flow growth rate of 96.45%.
  • CPHD's debt-to-equity ratio of 0.77 is somewhat low overall, but it is high when compared to the industry average, implying that the management of the debt levels should be evaluated further. Even though the debt-to-equity ratio shows mixed results, the company's quick ratio of 3.58 is very high and demonstrates very strong liquidity.
  • 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 Biotechnology industry. The net income has significantly decreased by 49.6% when compared to the same quarter one year ago, falling from -$6.58 million to -$9.84 million.
  • The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. Compared to other companies in the Biotechnology industry and the overall market, CEPHEID INC's return on equity significantly trails that of both the industry average and the S&P 500.

This article was written by a staff member of TheStreet.
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