Update (4:20 p.m. EST): Updated with closing price, day high and low prices, price change and volume information.

NEW YORK (TheStreet) -- Quantum Corporation  (QTM) - Get Report climbed 5.74% to $1.29, up 7 cents from its previous close of $1.22, at the close of the trading day on Tuesday after the company announced preliminary third quarter earnings that exceeded expectations.

The stock had a volume of 14,945,475, far above its average of 1,424,550. It hit a high of $1.43 and a low of $1.27 for the day.

The San Jose-based data protection company revealed it expects to report revenue of approximately $145 million to $146 million, well above the high end of the guidance range it noted in its Oct. 23, 2013 earnings announcement. These earnings would be for the third quarter that ended on Dec. 31, 2013.

Craig-Hallum also upgraded Quantum to a "buy" from a "hold" after the preliminary results. The company raised its target price on the stock to $2.50 from $2.

TST Recommends

TheStreet Ratings team rates Quantum as a "sell" with a ratings score of D. TheStreet Ratings Team has this to say about their recommendation:

"We rate QUANTUM CORP (QTM) a SELL. This is driven by several 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:

  • In its most recent trading session, QTM has closed at a price level that was not very different from its closing price of one year earlier. This is probably due to its weak earnings growth as well as other mixed factors. 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.
  • QTM, with its decline in revenue, underperformed when compared the industry average of 2.8%. Since the same quarter one year prior, revenues fell by 10.8%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
  • QUANTUM CORP has improved earnings per share by 40.0% 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, QUANTUM CORP reported poor results of -$0.22 versus -$0.04 in the prior year. This year, the market expects an improvement in earnings ($0.06 versus -$0.22).
  • 45.35% is the gross profit margin for QUANTUM CORP 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 -6.05% is in-line with the industry average.
  • Net operating cash flow has significantly increased by 92.95% to -$0.95 million when compared to the same quarter last year. In addition, QUANTUM CORP has also vastly surpassed the industry average cash flow growth rate of 6.76%.
  • You can view the full analysis from the report here: QTM Ratings Report