Why CommVault (CVLT) Received an Upgrade

NEW YORK (TheStreet) -- CommWault Systems  (CVLT) received an upgrade from JMP Securities to "outperform" from "market perform" with an $80 price target on Monday morning. The firm  said the data software company received the upgrade after a survey suggested customers will spend more through 2014.

Before the bell, shares were unchanged at $66.52.

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TheStreet Ratings team rates COMMVAULT SYSTEMS INC as a Buy with a ratings score of B. The team has this to say about their recommendation:

"We rate COMMVAULT SYSTEMS INC (CVLT) a BUY. This is driven by some important positives, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its robust revenue growth, largely solid financial position with reasonable debt levels by most measures, impressive record of earnings per share growth, compelling growth in net income and good cash flow from operations. We feel these strengths outweigh the fact that the company has had lackluster performance in the stock itself."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • CVLT's revenue growth has slightly outpaced the industry average of 10.9%. Since the same quarter one year prior, revenues rose by 19.6%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • CVLT has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign. Along with this, the company maintains a quick ratio of 2.72, which clearly demonstrates the ability to cover short-term cash needs.
  • COMMVAULT SYSTEMS INC has improved earnings per share by 40.0% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, COMMVAULT SYSTEMS INC increased its bottom line by earning $1.10 versus $0.68 in the prior year. This year, the market expects an improvement in earnings ($1.90 versus $1.10).
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Software industry. The net income increased by 44.2% when compared to the same quarter one year prior, rising from $12.20 million to $17.59 million.
  • Net operating cash flow has slightly increased to $30.16 million or 9.84% when compared to the same quarter last year. In addition, COMMVAULT SYSTEMS INC has also modestly surpassed the industry average cash flow growth rate of 0.21%.

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