Each weekday, TheStreet.com Ratings updates its ratings on the stocks it covers. The proprietary
ratings model projects a stock's total return potential over a 12-month period, including both price appreciation and
dividends. Buy, hold or sell ratings designate how the Ratings group expects these stocks to perform against a general benchmark of the equities market and
While the ratings model is quantitative, it uses both subjective and objective elements. For instance, subjective elements include expected equities market returns, future interest rates, implied industry outlook and forecast company earnings. Objective elements include volatility of past operating revenue, financial strength and company cash flows.
Some recent rating changes are highlighted below.
( MOT) has been downgraded to hold from buy. The company provides wireless and broadband communication products worldwide. Motorola reported a net loss in the first quarter of fiscal 2007. The operating loss for the quarter was $366 million compared with a profit of $849 million during the same period a year ago.
Profit marginsdeclined drastically as the company cut prices and sold cheaper phones in emerging markets. Motorola had been rated a buy since March 2005.
has been upgraded to a buy from a hold. TheStreet.com Ratings feels this company has many strong points, including robust revenue growth, expanding profit margins and solid stock performance.
Earnings per share shot up 54.5% in the first quarter of fiscal 2007, and Gilead Sciences seems poised for more EPS growth in the future. GILD had been rated a hold since February 2007.
Another pharmaceutical company,
, has also been boosted to buy from hold. The company's net sales climbed 15.5% in the first quarter of fiscal 2007 compared with the same quarter a year earlier. Strong worldwide pharmaceutical sales were driven by increased demand for the arthritis drug Humira and the first full quarter of sales from the Kos Pharmaceuticals acquisition.
Although Abbot's profits have dropped over the past fiscal year, TheStreet.com Ratings feels this is likely the result of expenses related to the company's investment in
. ABT had been rated a hold since January 2007.
has been upgraded to buy from hold. The company provides integrated software systems to industries that process oil, gas, petroleum, chemicals and pharmaceuticals. Revenue rose 25.8% in the second quarter of fiscal 2007 compared with the same quarter a year earlier.
This growth seems to have trickled down to the bottom line: Earnings per share tripled during the same time period. Aspen had a
debt-to-equity ratio of zero and is in a position to avoid any short-term cash problems. AZPN had been rated a hold since October 2006.
Commercial and consumer finance company
has been downgraded to hold from buy. Although earnings per share have been rising over the past two years, the company has an 8.57 debt-to-equity ratio that is higher than the specialized finance industry average. TheStreet.com Ratings feels this is a sign of poor debt management. CIT's 14.3% return on equity is well below the average set by its peers. The company had been rated a buy since April 2006.
Additional ratings changes are listed in the table below.