Update (9:45 a.m.): Updated with Thursday market open information.
NEW YORK (TheStreet) -- Jefferies increased its target price on SolarWinds (SWI) to $57, increased its estimates and set a "buy" rating. The firm noted a potential 20% license growth with sales capacity expansion, cross-sell efforts and transaction volume growth.
The stock was rising 1.37% to $46.12 at 9:41 a.m. on Thursday.
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Separately, TheStreet Ratings team rates SOLARWINDS INC as a "buy" with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation:
"We rate SOLARWINDS INC (SWI) a BUY. This is driven by a number of strengths, 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, good cash flow from operations, expanding profit margins and notable return on equity. We feel these strengths outweigh the fact that the company has had sub par growth in net income."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The revenue growth came in higher than the industry average of 10.2%. Since the same quarter one year prior, revenues rose by 32.0%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
- SWI's debt-to-equity ratio is very low at 0.08 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 1.20, which illustrates the ability to avoid short-term cash problems.
- Net operating cash flow has slightly increased to $49.72 million or 8.03% when compared to the same quarter last year. In addition, SOLARWINDS INC has also modestly surpassed the industry average cash flow growth rate of -0.99%.
- SOLARWINDS INC' earnings per share from the most recent quarter came in slightly below the year earlier quarter. 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, SOLARWINDS INC increased its bottom line by earning $1.18 versus $1.07 in the prior year. This year, the market expects an improvement in earnings ($1.60 versus $1.18).
- 40.76% is the gross profit margin for SOLARWINDS INC which we consider to be strong. Regardless of SWI's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 21.79% trails the industry average.
- You can view the full analysis from the report here: SWI Ratings Report