Story updated at 9:50 a.m. to reflect market activity.
Cornerstone OnDemand gained 0.5% to $39.52 in morning trading.
The firm set a price target of $31 for the software maker. UBS analysts said the upgrade is a valuation call, citing strong fundamentals against stock volatility.
Separately, TheStreet Ratings team rates CORNERSTONE ONDEMAND INC as a Sell with a ratings score of D. TheStreet Ratings Team has this to say about their recommendation:
"We rate CORNERSTONE ONDEMAND INC (CSOD) a SELL. This is driven by some concerns, 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 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 significantly underperformed when compared to that of the S&P 500 and the Internet Software & Services industry. The net income has significantly decreased by 45.0% when compared to the same quarter one year ago, falling from -$7.42 million to -$10.76 million.
- Current return on equity is lower than its ROE from the same quarter one year prior. This is a clear sign of weakness within the company. Compared to other companies in the Internet Software & Services industry and the overall market, CORNERSTONE ONDEMAND INC's return on equity significantly trails that of both the industry average and the S&P 500.
- The debt-to-equity ratio is very high at 4.16 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. Regardless of the company's weak debt-to-equity ratio, CSOD has managed to keep a strong quick ratio of 2.17, which demonstrates the ability to cover short-term cash needs.
- CORNERSTONE ONDEMAND INC's earnings per share declined by 40.0% 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 year. However, the consensus estimate suggests that this trend should reverse in the coming year. During the past fiscal year, CORNERSTONE ONDEMAND INC reported poor results of -$0.79 versus -$0.63 in the prior year. This year, the market expects an improvement in earnings (-$0.24 versus -$0.79).
- Compared to where it was a year ago, the stock is now trading at a higher level, and has traded in line with the S&P 500. Turning our attention to the future direction of the stock, we do not believe this stock offers ample reward opportunity to compensate for the risks, despite the fact that it rose over the past year.
- You can view the full analysis from the report here: CSOD Ratings Report
Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.