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Analysts' Actions: Buffalo Wild Wings, Choice Hotels, Dean Foods

Stocks in this article: BWLDCHHDFICPTPKI

NEW YORK (TheStreet) -- RATINGS CHANGES

Abercrombie & Fitch (ANF) was upgraded at Stifel Nicolaus to buy from hold. Twelve-month price target is $50. Company has an improved merchandise offering and is cutting costs, Stifel Nicolaus said.

Sotheby's (BID) was upgraded to buy at TheStreet Ratings.

Buffalo Wild Wings (BWLD) was upgraded at Morgan Stanley to equal-weight. Twelve-month price target is $148. Company has strong traffic trends and the stock is attractive, following a recent pullback, Morgan Stanley said.

Choice Hotels (CHH) was upgraded at Wells Fargo to market perform from underperform. Much of the negative SkyTouch news has already been priced in, Wells Fargo said.

Read More: Note to JetBlue: Please Don't Change -- Just Drop Money-Losing Flights

Dean Foods (DF) was upgraded at Credit Suisse to outperform from neutral. Twelve-month price target is $18. Company should benefit from lower dairy prices, Credit Suisse said.

New Oriental Education and Technology (EDU) was downgraded to hold at TheStreet Ratings.

Intercept (ICPT) was upgraded at Leerink Swann to outperform. Twelve-month price target is $445. Probability of NASH success is now 85%, following latest top-line data, Leerink Swann said.

PerkinElmer (PKI) was initiated with a buy rating at Stifel NIcolaus. Twelve-month price target is $53. Organic growth should begin to rebound in the second half, Stifel Nicolaus said.

Read More: Kinder Morgan Deal May Not Be the Game Changer You Think It Is

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 BUFFALO WILD WINGS INC as a Buy with a ratings score of A-. TheStreet Ratings Team has this to say about their recommendation:

"We rate BUFFALO WILD WINGS INC (BWLD) 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 robust revenue growth, solid stock price performance, impressive record of earnings per share growth, compelling growth in net income and reasonable valuation levels. We feel these strengths outweigh the fact that the company shows low profit margins."

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

  • The revenue growth came in higher than the industry average of 5.8%. Since the same quarter one year prior, revenues rose by 20.0%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • Powered by its strong earnings growth of 42.04% and other important driving factors, this stock has surged by 33.78% over the past year, outperforming the rise in the S&P 500 Index during the same period. Turning to the future, naturally, any stock can fall in a major bear market. However, in almost any other environment, the stock should continue to move higher despite the fact that it has already enjoyed nice gains in the past year.
  • BUFFALO WILD WINGS INC has improved earnings per share by 42.0% 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, BUFFALO WILD WINGS INC increased its bottom line by earning $3.80 versus $3.06 in the prior year. This year, the market expects an improvement in earnings ($5.05 versus $3.80).
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Hotels, Restaurants & Leisure industry. The net income increased by 43.8% when compared to the same quarter one year prior, rising from $16.49 million to $23.70 million.

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

"We rate DEAN FOODS CO (DF) 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, notable return on equity and reasonable valuation levels. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, poor profit margins 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 3.0%. Since the same quarter one year prior, revenues slightly increased by 2.1%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. Compared to other companies in the Food Products industry and the overall market, DEAN FOODS CO's return on equity significantly exceeds that of both the industry average and the S&P 500.
  • DEAN FOODS CO reported significant earnings per share improvement 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 year. However, we anticipate underperformance relative to this pattern in the coming year. During the past fiscal year, DEAN FOODS CO increased its bottom line by earning $3.39 versus $0.26 in the prior year. For the next year, the market is expecting a contraction of 83.8% in earnings ($0.55 versus $3.39).
  • The gross profit margin for DEAN FOODS CO is rather low; currently it is at 19.46%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of -0.38% trails that of 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 Food Products industry. The net income has significantly decreased by 101.8% when compared to the same quarter one year ago, falling from $492.61 million to -$8.96 million.

This article was written by a staff member of TheStreet.

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