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TheStreet Open House

Analysts' Actions: Cabot Oil, Cyberonics, Gap, PG&E, SeaWorld, More

NEW YORK (TheStreet) -- RATINGS CHANGES

Cabot Oil & Gas  (COG) was downgraded at Deutsche Bank to hold from buy. Twelve-month price target is $38. Company lacks near-term catalysts, Deutsche Bank said.

Cyberonics (CYBX) was downgraded at Canaccord to hold from buy. Twelve-month price target is $52. New U.S. patient growth is slowing, Canaccord said.

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Edison International (EIX) was upgraded at BMO Capital to outperform. Twelve-month price target is $64. Company has no new equity needs and can grow earnings by 7% to 9% and the dividend from 12% to 15%, through 2018, BMO Capital said.

E-House China (EJ) was upgraded to buy at TheStreet Ratings.

Gap (GPS) was upgraded at Janney Montgomery to buy from neutral. Company is a best-in-class operator and the softlines sector is improving, Janney Montgomery said.

PG&E (PCG) was downgraded at Argus to hold from buy. Company was authorized to generate a lower ROE and is facing pending equity dilution, Argus said.

Pericom Semiconductor (PSEM) was upgraded to buy at TheStreet Ratings.

SeaWorld (SEAS) was upgraded at FBR Capital Markets to outperform from market perform. Twelve-month price target is $26. Company is cutting costs and the dividend yield should provide support, FBR Capital Markets said.

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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 SEAWORLD ENTERTAINMENT INC as a Sell with a ratings score of D+. TheStreet Ratings Team has this to say about their recommendation:

"We rate SEAWORLD ENTERTAINMENT INC (SEAS) a SELL. This is driven by multiple 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. Among the areas we feel are negative, one of the most important has been a generally disappointing historical performance in the stock itself."

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

  • SEAS's stock share price has done very poorly compared to where it was a year ago: Despite any rallies, the net result is that it is down by 48.49%, which is also worse that the performance of the S&P 500 Index. Investors have so far failed to pay much attention to the earnings improvements the company has managed to achieve over the last 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.
  • Regardless of the drop in revenue, the company managed to outperform against the industry average of 5.4%. Since the same quarter one year prior, revenues slightly dropped by 1.5%. The declining revenue has not hurt the company's bottom line, with increasing 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 Hotels, Restaurants & Leisure industry and the overall market on the basis of return on equity, SEAWORLD ENTERTAINMENT INC has underperformed in comparison with the industry average, but has exceeded that of the S&P 500.
  • SEAWORLD ENTERTAINMENT 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, SEAWORLD ENTERTAINMENT INC reported lower earnings of $0.57 versus $0.83 in the prior year. This year, the market expects an improvement in earnings ($1.40 versus $0.57).
  • 45.00% is the gross profit margin for SEAWORLD ENTERTAINMENT 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 9.21% trails the industry average.

TheStreet Ratings team rates CABOT OIL & GAS CORP as a Buy with a ratings score of A-. TheStreet Ratings Team has this to say about their recommendation:

"We rate CABOT OIL & GAS CORP (COG) 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, impressive record of earnings per share growth, compelling growth in net income, good cash flow from operations and expanding profit margins. We feel these strengths outweigh the fact that the company has had lackluster performance in the stock itself."

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

  • The revenue growth came in higher than the industry average of 2.6%. Since the same quarter one year prior, revenues rose by 18.6%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • CABOT OIL & GAS CORP has improved earnings per share by 33.3% 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, CABOT OIL & GAS CORP increased its bottom line by earning $0.67 versus $0.31 in the prior year. This year, the market expects an improvement in earnings ($1.15 versus $0.67).
  • The company, on the basis of net income growth from the same quarter one year ago, has significantly outperformed against the S&P 500 and exceeded that of the Oil, Gas & Consumable Fuels industry average. The net income increased by 32.9% when compared to the same quarter one year prior, rising from $89.11 million to $118.42 million.
  • Net operating cash flow has increased to $329.57 million or 18.85% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of -6.58%.
  • The gross profit margin for CABOT OIL & GAS CORP is currently very high, coming in at 73.85%. Regardless of COG's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, COG's net profit margin of 22.20% significantly outperformed against the industry.

This article was written by a staff member of TheStreet.

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