TSC Ratings provides exclusive stock, ETF and mutual fund ratings and commentary based on award-winning, proprietary tools. Its "safety first" approach to investing aims to reduce risk while seeking solid outperformance on a total return basis.

The following ratings changes were generated on Thursday, April 30.

We've upgraded Adtran ( ADTN) from hold to buy, driven by its largely solid financial position with reasonable debt levels by most measures, expanding profit margins and notable return on equity. We feel these strengths outweigh the fact that the company shows weak operating cash flow.

The company has a debt-to-equity ratio of 0.1, which is above the industry average. It has a quick ratio of 4. Its 63.4% gross profit margin has increased from the year-ago quarter, and its 13.8% net profit margin is above the industry average. Revenue dropped by 7.9% since the same quarter last eyar, and EPS are down. Net income fell 10.9%, from $17.1 million to $15.2 million. ROE has decreased slightly, implying a minor weakness in the organization.

We've downgraded Emergent BioSolutions ( EBS) from hold to sell, driven by its deteriorating net income, weak operating cash flow and feeble growth in its earnings per share.

Net income fell 94.8% to $1.5 million, from $27.7 million in the year-ago quarter. Net operating cash flow fell to -$11.9 million, and EPS are also down. The consensus estimate, however, expects the company's two-year trend of declining EPS should reverse in the coming year. ROE has slightly decreased from the year-ago quarter.

Shares have risen over the past year, outperforming the S&P 500. We feel that the combination of its price rise over the last year and its current price-to-earnings ratio relative to its industry tend to reduce its upside potential.

We've upgraded FirstMerit ( FMER) from hold to buy, driven by its expanding profit margins and notable return on equity. We feel these strengths outweigh the fact that the company has had somewhat weak growth in earnings per share.

FirstMerit's Gross profit margin of 68.6% has increased from the year-ago quarter. Revenue dropped by 9.5%, and EPS are down. ROE has decreased slightly. Net income fell 7.4% compared with the same quarter last year, to $29.1 million from $31.5 million.

Despite the decline in its share price over the last year, this stock is still more expensive (when compared to its current earnings) than most other companies in its industry. We feel, however, that other strengths this company displays compensate for this.

We've upgraded Quest Software ( QSFT) from hold to buy, driven by its revenue growth, largely solid financial position with reasonable debt levels by most measures, growth in earnings per share, increase in net income and expanding profit margins. We feel these strengths outweigh the fact that the company shows weak operating cash flow.

Revenue increased by 8% since the same quarter a year ago, and EPS are up 16.7%. We expect the company's yearlong trend of EPS growth to continue. Quest has no debt to speak of and a quick ratio of 1. Net income increased by 15.3%, to $29.2 million in the most recent quarter from $25.3 million in the year-ago quarter. Quest's gross profit margin of 93.2% has increased since the year-ago quarter. Its net profit margin of 14.5% trails the industry average.

We've downgraded Seaspan ( SSW) from hold to sell, driven by its deteriorating net income, disappointing return on equity, generally weak debt management, generally disappointing historical performance in the stock itself and feeble growth in its earnings per share.

Net income fell from -$20 million in the year-ago quarter to -$241.9 million in the most-recent quarter. ROE also decreased, and EPS are down, though the consensus estimate suggests that the company's two-year trend of declining EPS should reverse in the coming year. Seaspan's debt-to-equity ratio is 2.3, which is higher than the industry average. Its quick ratio is 5.8.

Shares have tumbled 74.9% over the past year, underperforming the S&P 500. Naturally, the overall market trend is bound to be a significant factor. However, in one sense, the stock's sharp decline last year is a positive for future investors, making it cheaper (in proportion to its earnings over the past year) than most other stocks in its industry. But due to other concerns, we feel the stock is still not a good buy right now.

All ratings changes from April 30 are listed below.

Ticker
Company
Current
Change
Previous
ACTL
Actel
HOLD
Upgrade
SELL
ADTN
Adtran
BUY
Upgrade
HOLD
AIQ
Alliance Healthcare Services
BUY
Upgrade
HOLD
AME
Ametek
BUY
Upgrade
HOLD
ARG
Airgas
BUY
Upgrade
HOLD
ARW
Arrow Electronics
HOLD
Upgrade
SELL
CPL
CPFL Energia
BUY
Upgrade
HOLD
DAAT
DAC Technologies
HOLD
Upgrade
SELL
DAI
Daimler
SELL
Downgrade
HOLD
EBS
Emergent Biosolutions
SELL
Downgrade
HOLD
EDUC
Educational Development
BUY
Upgrade
HOLD
EJ
E-House China Holdings
HOLD
Upgrade
SELL
ENTR
Entropic Communications
HOLD
Upgrade
SELL
EQR
Equity Residential
HOLD
Upgrade
SELL
FMER
FirstMerit
BUY
Upgrade
HOLD
HSP
Hospira
BUY
Upgrade
HOLD
IFF
International Flavors & Fragrances
BUY
Upgrade
HOLD
ISLE
Isle of Capri Casinos
HOLD
Upgrade
SELL
MKTX
MarketAxess Holdings
BUY
Upgrade
HOLD
MXB
MSCI
HOLD
Upgrade
SELL
OPLK
Oplink Communications
HOLD
Upgrade
SELL
PDO
Pyramid Oil
HOLD
Downgrade
BUY
QSFT
Quest Software
BUY
Upgrade
HOLD
RMG
RiskMetrics Group
HOLD
Upgrade
SELL
SGU
Star Gas Partners
HOLD
Upgrade
SELL
SSW
Seaspan
SELL
Downgrade
HOLD
TLK
Telekomunikasi Indonesia
BUY
Upgrade
HOLD
TPI
Tianyin Pharmaceutical
HOLD
Upgrade
SELL
UHS
Universal Health Services
BUY
Upgrade
HOLD
UHT
Universal Health Realty Income
BUY
Upgrade
HOLD

Note: Our quantitative model makes stock recommendations based on GAAP figures that may differ materially from data as reported by the companies themselves. As a result, rating changes are occasionally driven by so-called nonrecurring items. As always, we urge readers to use TSC Ratings' reports in conjunction with additional information to construct their opinions on the value that should be placed on any given stock.

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