NEW YORK (TheStreet) -- CA Technologies (CA) - Get Report stock coverage was initiated at JMP Securities with a "market perform" rating.

Shares are gaining 0.33% to $30.39 on Thursday.

The firm noted that CA is a diversified software company going through a multi-year transition.

In a steadily declining mainframe business, CA holds a leadership position, and it also participates in "rapidly growing software markets," such as Cloud Management, DevOps, IT Business Management, and Security, according to the analyst note.

However, the question is whether the company can successfully return to sustained growth after 10 consecutive quarters of negative revenue growth, analysts said.

Given the risk around sales execution, an increasingly competitive enterprise solutions space, and risk around its recent acquisition of Rally Software for $480 million, analysts said they believe shares remain fairly valued.

Separately, TheStreet Ratings team rates CA INC as a Buy with a ratings score of B+. TheStreet Ratings Team has this to say about their recommendation:

"We rate CA INC (CA) a BUY. This is driven by a number of strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its increase in stock price during the past year, increase in net income, largely solid financial position with reasonable debt levels by most measures, reasonable valuation levels and expanding profit margins. We feel its strengths outweigh the fact that the company shows weak operating cash flow."

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

  • Compared to where it was a year ago today, the stock is now trading at a higher level, reflecting both the market's overall trend during that period and the fact that the company's earnings growth has been robust. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Software industry. The net income increased by 41.1% when compared to the same quarter one year prior, rising from $107.00 million to $151.00 million.
  • CA's debt-to-equity ratio is very low at 0.25 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.18, which illustrates the ability to avoid short-term cash problems.
  • The gross profit margin for CA INC is currently very high, coming in at 84.75%. 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 14.76% trails the industry average.
  • You can view the full analysis from the report here: CA Ratings Report