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 interest rates. 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. Online jewelry retailer Blue Nile ( NILE) has been downgraded to a hold from a buy. The company's gross profit margin has fallen over the past year, and the net profit margin is below the internet retail industry average. Blue Nile had a negative net operating cash flow in the first quarter of fiscal 2007. The company's stock price shot up 56.5% over the past 12 months, and at this point it trades at a premium valuation to many of its peers. Blue Nile had been rated a buy since February 2007. TheStreet.com Ratings has initiated coverage of PHH ( PHH) with a sell rating. The company is an outsource provider of mortgage and fleet management services. It was spun off from Cendant in 2005. The company lost 13 cents per share in the third quarter of fiscal 2006 after gaining 90 cents per share in the third quarter of 2005. The market is expecting a further contraction in earnings in the coming year. The company's debt-to-equity ratio is currently very high at 4.8.
Real estate investment trust PS Business Parks ( PSB) has been boosted to a buy from a hold. The company specializes in holding commercial property such as office and industrial space. PS Business Parks' revenues wasu up 10.2% in the first quarter of fiscal 2007 compared to the same quarter a year ago. This growth seems to have trickled down to the bottom line, where earnings per share increased 28.6% during that same time period. TheStreet.com Ratings is expecting further EPS improvement in the coming year. PSB had been rated a hold since March 2007. Circuit and semiconductor manufacturer Microsemi ( MSCC) has been downgraded to a hold from a buy. The company has a strong customer base, including Boeing ( BA), Cisco ( CSCO) and Siemens ( SI) that should allow for continued revenue growth. However, TheStreet.com Ratings is concerned about the debt Microsemi has taken on following acquisitions. MSCC recently completed the purchase of two companies, PowerDsine and Advanced Power Technologies, moves that will result in higher interest payments for the company. Microsemi had been rated a buy since May 2005. Plastics and chemicals manufacturer Nova ( NCX) has been upgraded to a hold from a sell. The company's EPS jumped to 53 cents per share in the first quarter of fiscal 2007 compared to just 5 cents per share in the same quarter a year ago. Net income growth during that period significantly exceeded the chemical industry average. Net operating cash flow is also on the rise. Nova Chemicals had been rated a sell since February 2007. Some recent rating changes are highlighted below.
|Stock Upgrades, Downgrades From TheStreet.com Ratings|
|Company Name||Ticker||Change||New Rating||Former Rating|
|Goodman Global Inc||GGL||Downgrade||Sell|
|Blue nile inc||NILE||Downgrade||Hold||Buy|
|Kearny Financial Corp.||KRNY||Upgrade||Hold||Sell|
|First Cmnty Bk Corp Amer||FCFL||Downgrade||Hold||Buy|
|Simulations Plus Inc.||SLP||Upgrade||Buy||Hold|
|PS Business parks||PSB||Upgrade||Buy||Hold|
|OSI Systems Inc||OSIS||Upgrade||Buy||Hold|
|NOVA Chemicals Corp.||NCX||Upgrade||Hold||Sell|
|Albany Molecular Resh Inc.||AMRI||Upgrade||Hold||Sell|
|Moscow Cablecom Corp.||MOCC||Upgrade||Hold||Sell|
|Source: TheStreet.com Ratings|