Will This Upgrade Help Quality Systems (QSII) Today? (Update)

Update (9:40 a.m.): Updated with Friday market open information.

NEW YORK (TheStreet) -- FBR Capital upgraded Quality Systems  (QSII) to "market perform" from "underperform" and cited valuation as the reason for the move.

The stock was rising 3.09% to $17.69 at 9:40 a.m. on Friday.

Must Read: Warren Buffett's 10 Favorite Dividend Stocks

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

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

"We rate QUALITY SYSTEMS INC (QSII) 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 largely solid financial position with reasonable debt levels by most measures, reasonable valuation levels and good cash flow from operations. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, disappointing return on equity and a generally disappointing performance in the stock itself."

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

  • QSII 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. To add to this, QSII has a quick ratio of 1.85, which demonstrates the ability of the company to cover short-term liquidity needs.
  • The gross profit margin for QUALITY SYSTEMS INC is rather high; currently it is at 59.79%. Regardless of QSII's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, QSII's net profit margin of -11.56% significantly underperformed when compared to the industry average.
  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Health Care Technology industry. The net income has significantly decreased by 180.6% when compared to the same quarter one year ago, falling from $15.63 million to -$12.59 million.
  • Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Health Care Technology industry and the overall market on the basis of return on equity, QUALITY SYSTEMS INC underperformed against that of the industry average and is significantly less than that of the S&P 500.
  • You can view the full analysis from the report here: QSII 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.

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

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