NEW YORK (TheStreet) -- Vimicro International (VIMC) was soaring 39.83% to $4.14 at 11:46 a.m. EST on Monday after the Chinese fabless chip company updated its fourth-quarter guidance for the fiscal year 2013 and first-quarter guidance for the fiscal year 2014.
For the fourth quarter, Vimicro now expects total revenues of $21 million to $22 million, an increase from its previous guidance of $13.5 million to $15.5 million. The updated guidance includes a portion of a $20 million backlog. The rest of the backlog will affect the first-quarter and second-quarter figures.
For the first quarter, Vimicro now anticipates revenues of $15 million to $17 million, which would mark an increase from $7.9 million in the first quarter of 2013.
TheStreet Ratings team rates VIMICRO INTL CORP -ADR as a "sell" with a ratings score of D+. TheStreet Ratings Team has this to say about their recommendation:
"We rate VIMICRO INTL CORP -ADR (VIMC) a SELL. This is driven by a few notable weaknesses, which we believe should have a greater impact than any strengths, and could make it more difficult for investors to achieve positive results compared to most of the stocks we cover. The company's weaknesses can be seen in multiple areas, such as its disappointing return on equity and feeble growth in its earnings per share."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. Compared to other companies in the Semiconductors & Semiconductor Equipment industry and the overall market, VIMICRO INTL CORP -ADR's return on equity significantly trails that of both the industry average and the S&P 500.
- VIMICRO INTL CORP -ADR's earnings per share declined by 25.0% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. We feel it is likely to report a decline in earnings in the coming year. During the past fiscal year, VIMICRO INTL CORP -ADR turned its bottom line around by earning $0.05 versus -$0.32 in the prior year. For the next year, the market is expecting a contraction of 400.0% in earnings (-$0.15 versus $0.05).
- 39.47% is the gross profit margin for VIMICRO INTL CORP -ADR which we consider to be strong. It has increased from the same quarter the previous year. Despite the strong results of the gross profit margin, VIMC's net profit margin of 7.53% significantly trails the industry average.
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Semiconductors & Semiconductor Equipment industry. The net income increased by 52.3% when compared to the same quarter one year prior, rising from $1.20 million to $1.82 million.
- Compared to its closing price of one year ago, VIMC's share price has jumped by 65.16%, exceeding the performance of the broader market during that same time frame. Regarding the future course of this stock, we feel that the risks involved in investing in VIMC do not compensate for any future upside potential, despite the fact that it has seen nice gains over the past 12 months.
- You can view the full analysis from the report here: VIMC Ratings Report