EMC Stock Downgraded Today at Pacific Crest

NEW YORK (TheStreet) -- Shares of EMC Corp. (EMC) are down 1.05% to $25.54 in pre-market trading today as Pacific Crest downgraded the company to "sector perform" from "outperform."

Hopkinton, MA-based EMC develops, delivers, and supports information infrastructure and virtual infrastructure technologies, solutions, and services.

"Weak storage field checks in a seasonally slow first quarter, coupled with an increasing appetite to consolidate, heighten nearterm execution risks for EMC. We are downgrading EMC and lowering our estimates due to increasing seasonal, secular and competitive risks," analysts said.

Analysts are less confident in the upside scenarios for EMC this year. Secular technology concerns are likely to limit multiple expansion (the four-year average FTM P/E is 14x), analysts noted.

Ongoing investment to transform and diversify its core business model beyond storage will also likely limit earnings expansion, analysts added.

Bottom line, 2015 is shaping up to be a transitional year that makes EMC an opportunity cost, in their view. Accordingly, they apply a FTM P/E of 12x to 14x their revised estimates and see a fair value range of $24 to $28.

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

"We rate EMC CORP/MA (EMC) a BUY. This is driven by a few notable 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 revenue growth, largely solid financial position with reasonable debt levels by most measures, expanding profit margins, good cash flow from operations and growth in earnings per share. 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:

• EMC's revenue growth trails the industry average of 31.7%. Since the same quarter one year prior, revenues slightly increased by 5.5%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
• Although EMC's debt-to-equity ratio of 0.25 is very low, it is currently higher than that of the industry average. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.09, which illustrates the ability to avoid short-term cash problems.
• The gross profit margin for EMC CORP/MA is currently very high, coming in at 70.92%. 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 16.25% trails the industry average.
• Net operating cash flow has slightly increased to $2,231.00 million or 1.87% when compared to the same quarter last year. Despite an increase in cash flow, EMC CORP/MA's cash flow growth rate is still lower than the industry average growth rate of 51.61%.
• EMC CORP/MA has improved earnings per share by 16.7% 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, EMC CORP/MA reported lower earnings of $1.31 versus $1.33 in the prior year. This year, the market expects an improvement in earnings ($1.98 versus $1.31).
• You can view the full analysis from the report here: EMC Ratings Report

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