NEW YORK (TheStreet) -- NetSuite (N - Get Report) shares are up 0.7% to $87.13 on Wednesday after having coverage initiated with a "buy" rating and $109 price target by analysts at DA Davidson.
Shares are trading on weak volume with 167,000 changing hands so far, below the stock's three month daily trading average of 582,000.
Separately, TheStreet Ratings team rates NETSUITE INC as a Sell with a ratings score of D+. TheStreet Ratings Team has this to say about their recommendation:
"We rate NETSUITE INC (N) 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. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income, disappointing return on equity, generally high debt management risk, 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 underperformed when compared to that of the S&P 500 and the Software industry average. The net income has decreased by 13.6% when compared to the same quarter one year ago, dropping from -$20.39 million to -$23.16 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, NETSUITE INC's return on equity significantly trails that of both the industry average and the S&P 500.
- The debt-to-equity ratio of 1.26 is relatively high when compared with the industry average, suggesting a need for better debt level management. Regardless of the company's weak debt-to-equity ratio, N has managed to keep a strong quick ratio of 1.88, which demonstrates the ability to cover short-term cash needs.
- Reflecting the weaknesses we have cited, including the decline in the company's earnings per share, N has underperformed the S&P 500 Index, declining 11.20% from its price level of one year ago. The fact that the stock is now selling for less than others in its industry in relation to its current earnings is not reason enough to justify a buy rating at this time.
- NETSUITE INC's earnings per share declined by 10.7% in the most recent quarter compared to 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, NETSUITE INC reported poor results of -$0.96 versus -$0.49 in the prior year. This year, the market expects an improvement in earnings ($0.26 versus -$0.96).
- You can view the full analysis from the report here: N Ratings Report
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