NEW YORK (TheStreet) -- Sonus Networks (SONS) popped on Monday after Jefferies called the SIP-based communications equipment supplier as potentially the "most underappreciated story in the technology sector today."
The firm was impressed with the company's investor day in San Francisco on Thursday, which had "a barrage of positive data points." Jefferies believes Sonus could be on the path to a $10 stock price and reiterated its "buy" rating.
The stock was up 7.12% to $3.68 at 11:10 a.m.
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TheStreet Ratings team rates SONUS NETWORKS INC as a "hold" with a ratings score of C+. TheStreet Ratings Team has this to say about their recommendation:
"We rate SONUS NETWORKS INC (SONS) 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:
- SONS's revenue growth has slightly outpaced the industry average of 1.0%. Since the same quarter one year prior, revenues slightly increased by 1.4%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- SONS's debt-to-equity ratio is very low at 0.01 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Along with this, the company maintains a quick ratio of 3.08, which clearly demonstrates the ability to cover short-term cash needs.
- The gross profit margin for SONUS NETWORKS INC is rather high; currently it is at 67.87%. It has increased from the same quarter the previous year. Despite the strong results of the gross profit margin, SONS's net profit margin of 0.35% significantly trails the industry average.
- 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 Communications Equipment industry and the overall market, SONUS NETWORKS 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: SONS Ratings Report