Why InvenSense (INVN) Is Gaining Today

NEW YORK (TheStreet) -- InvenSense (INVN) was gaining 5.8% to $22.58 Monday following a price target increase from RW Baird.

The analyst firm raised its price target for the mobile sensor maker to $28 from $23. The firm believes InvenSense is the only sensor maker with chips in the upcoming Samsung Galaxy S5. RW Baird also thinks the rumored Apple (AAPL) iWatch could be a growth opportunity for InvenSense.

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TheStreet Ratings team rates INVENSENSE INC as a Hold with a ratings score of C-. TheStreet Ratings Team has this to say about their recommendation:

"We rate INVENSENSE INC (INVN) 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 also find weaknesses including deteriorating net income, disappointing return on equity and premium valuation."

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

  • The revenue growth came in higher than the industry average of 2.7%. Since the same quarter one year prior, revenues rose by 13.2%. 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.
  • Despite currently having a low debt-to-equity ratio of 0.43, it is higher than that of the industry average, inferring that management of debt levels may need to be evaluated further. Even though the debt-to-equity ratio shows mixed results, the company's quick ratio of 3.18 is very high and demonstrates very strong liquidity.
  • 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. When compared to other companies in the Electronic Equipment, Instruments & Components industry and the overall market, INVENSENSE INC's return on equity is below that of both the industry average and the S&P 500.
  • You can view the full analysis from the report here: INVN Ratings Report

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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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