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 Monday, June 15.

We've upgraded AllianceBernstein ( AB) from sell to hold. Strengths include the company's largely solid financial position with reasonable debt levels by most measures, expanding profit margins and notable return on equity. However, we also find weaknesses including feeble growth in the company's earnings per share, deteriorating net income and weak operating cash flow.

AllianceBernstien has no debt to speak of, a favorable sign and its gross profit margin is very high at 100%. Its net profit margin of 53.4% outperformed the industry average. Revenue plummeted by 84.6% since the same quarter last year, and EPS decreased. Net income fell 90.7% compared with the year-ago quarter, from $72.4 million to $6.7 million, undperforming the capital markets industry average. Net operating cash flow fell 71.2% to $26.6 million.

We've upgraded Altera ( ALTR) from hold to buy, driven by its expanding profit margins, largely solid financial position with reasonable debt levels by most measures and notable return on equity. We feel these strengths outweigh the fact that the company has had lackluster performance in the stock itself.

Altera's gross profit margin is rather high at 67.2% but has decreased from the year-ago period. The company's 16.6% net profit margin significantly outperformed the industry. The debt-to-equity ratio of 0.6 is love but above the industry average, while the quick ratio of 3.3 is very high and demonstrates very strong liquidity. Revenue fell by 21.3% since the year-ago quarter, and EPS decreased. Net income fell 47.6%, from $83.9 million to $44 million. Return on equity also fell from the year-ago quarter, a sign of weakness within the company.

We've upgraded Chindex ( CHDX) from sell to hold. Strengths include the company's robust revenue growth, largely solid financial position with reasonable debt levels by most measures and growth in earnings per share. However, we find that the company's profit margins have been poor overall.

Revenue leaped by 72.3% since the year-ago quarter, outperforming the industry average of 1.7% growth and helping to boost EPS. Chindex's debt-to-equity ratio of 0.3 is below the industry average, implying successful management of debt levels, and its 2.9 quick ratio demonstrates an ability to cover short-term cash needs. ROE has improved slightly compared with the year-ago quarter. The gross profit margin of 19.6% is rather low, having decreased from the same quarter a yearago, but the net profit margin of 5.7% is above the industry average.

Looking ahead, the stock's rise over the last year has already helped drive it to a level that is relatively expensive compared to the rest of its industry, implying reduced upside potential.

We've upgraded Capella Education ( CPLA) from hold to buy, driven by its impressive record of earnings per share growth, robust revenue growth, largely solid financial position with reasonable debt levels by most measures, good cash flow from operations and expanding profit margins. We feel these strengths outweigh the fact that the company has had lackluster performance in the stock itself.

EPS improved significantly in the most recent quarter compared with the same quarter last year, and we feel that the company's two-year trend of positive EPS growth should continue. Revenue rose by 17.1% since the year-ago quarter, and net operating cash flow increased by 134.2% to $23.6 million. Capella has no debt to speak of and maintains a quick ratio of 3.7, which demonstrates its ability to cover short-term cash needs. The gross profit margin of 63.7% has increased from the year-ago quarter, but the net profit margin of 10.9% trails the industry average.

We've upgraded ShoreTel ( SHOR) from sell to hold. Strengths include the company's solid stock price performance, largely solid financial position with reasonable debt levels by most measures and good cash flow from operations. However, we also find weaknesses including feeble growth in the company's earnings per share, deteriorating net income and disappointing return on equity.

ShoreTel has no debt to speak of and maintains a quick ratio of 4.1, demonstrating an ability to cover short-term cash needs. Revenue dropped by 0.8% since the year-ago quarter but outperformed the industry. EPS decreased steeply, and we anticipate that the company's yearlong trend of declining EPS should continue in the coming year. Net income fell from -$1.7 million in the same quarter last year to -$7 million, underperforming the communications equipment industry but outperforming the S&P 500.

Shares are up 41.3% over the past year, outperforming the broader market during the same time frame. Although ShoreTel had significant growth over the past year, our hold rating indicates that we do not recommend additional investment in this stock at the current time.

All ratings changes from June 15 are listed below.

Ticker
Company
Current
Change
Previous
AB
AllianceBernstein Holding
HOLD
Upgrade
SELL
ALTR
Altera
BUY
Upgrade
HOLD
BLD
Baldwin Technology
SELL
Downgrade
HOLD
CAXG
China Aoxing Pharma
HOLD
Upgrade
SELL
CHDX
Chindex International
HOLD
Upgrade
SELL
CPLA
Capella Education
BUY
Upgrade
HOLD
CPY
CPI
SELL
Downgrade
HOLD
CTCT
Constant Contact
HOLD
Upgrade
SELL
CTIG
CTI Group Holdings
SELL
Downgrade
HOLD
NOOF
New Frontier Media
HOLD
Upgrade
SELL
NSYS
Nortech Systems
SELL
Downgrade
HOLD
PHPG
Photonic Products Group
SELL
Downgrade
HOLD
SHOR
Shoretel
HOLD
Upgrade
SELL
SMCI
Super Micro Computer
HOLD
Upgrade
SELL
TRCI
Technology Research
BUY
Upgrade
HOLD
UTGN
UTG
SELL
Downgrade
HOLD
VETS
Pet DRx
SELL
Initiated

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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