NEW YORK (TheStreet) -- Goldman Sachs upgraded Infinera (INFN) to "buy" from "neutral" on Wednesday and set an $11.50 target price. The firm also increased its estimates on the company, which manufactures high capacity optical transmission equipment.
Goldman's upgrade reflects benefits from the 100G optical upgrade cycle and margin expansion.
The stock was rising 13.25% to $9.57 at 11:35 a.m. on Wednesday.
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Separately, TheStreet Ratings team rates INFINERA CORP as a "hold" with a ratings score of C-. TheStreet Ratings Team has this to say about their recommendation:
"We rate INFINERA CORP (INFN) 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 solid stock price performance. 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:
- INFN's revenue growth has slightly outpaced the industry average of 1.1%. Since the same quarter one year prior, revenues slightly increased by 8.6%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- Although INFN's debt-to-equity ratio of 0.26 is very low, it is currently higher than that of the industry average. Along with this, the company maintains a quick ratio of 2.83, which clearly demonstrates the ability to cover short-term cash needs.
- 44.50% is the gross profit margin for INFINERA CORP which we consider to be strong. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of -7.31% is in-line with the industry average.
- The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. Compared to other companies in the Communications Equipment industry and the overall market, INFINERA CORP'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: INFN Ratings Report