Will These Downgrades Hurt RF Micro Devices (RFMD) Today? (Update)

Update (9:35 a.m.): Updated with Tuesday market open information.

NEW YORK (TheStreet) -- Both Canaccord and DA Davidson downgraded RF Micro Devices  (RFMD) on Tuesday. Canaccord downgraded to "hold" and set a $7.25 target price based on valuation, while Davidson downgraded to "buy" from "neutral" and set a $7 target price based on valuation.

The stock was falling 1.85% to $6.90 shortly after the market opened on Tuesday.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

----------

Separately, TheStreet Ratings team rates RF MICRO DEVICES INC as a "hold" with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:

"We rate RF MICRO DEVICES INC (RFMD) a HOLD. The primary factors that have impacted our rating are mixed - some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures and compelling growth in net income. However, as a counter to these strengths, we find that the company's return on equity has been disappointing."

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

  • RFMD's revenue growth has slightly outpaced the industry average of 5.9%. Since the same quarter one year prior, revenues slightly increased by 6.4%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • RFMD's debt-to-equity ratio is very low at 0.13 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.49, which illustrates the ability to avoid short-term cash problems.
  • Compared to where it was 12 months ago, the stock is up, but it has so far lagged the appreciation in the S&P 500. Despite the fact that it has already risen in the past year, there is currently no conclusive evidence that warrants the purchase or sale of this stock.
  • RF MICRO DEVICES INC reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, RF MICRO DEVICES INC reported poor results of -$0.20 versus $0.00 in the prior year. This year, the market expects an improvement in earnings ($0.42 versus -$0.20).
  • Current return on equity exceeded its ROE from the same quarter one year prior. This is a clear sign of strength within the company. Compared to other companies in the Semiconductors & Semiconductor Equipment industry and the overall market, RF MICRO DEVICES INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • You can view the full analysis from the report here: RFMD Ratings Report

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

If you liked this article you might like

Jim Cramer: Investors Always Need to Be Ready in This Stock Market

Stocks Hold Ground Against Crude Oil's Fresh Five-Year Lows

RF Micro Devices (RFMD) Weak On High Volume

Stocks Shake Off Greek Political Drama to Grind to New Records

Stock Futures Slip as Political Turmoil in Greece Weighs on Markets