Why 21Vianet Group (VNET) Hit An All-Time High Today

NEW YORK (TheStreet) -- 21Vianet Group  (VNET) hit an all-time high of $31.89 as of 11:15 a.m. on Tuesday after Credit Suisse upgraded China's largest carrier-neutral Internet data center services provider to "outperform" from "neutral."

The firm increased its target price to $36 from $27 and increased its full year 2014 cloud revenue forecast by 50% $60 million from $40 million. Credit Suisse also increased its full year 2014 revenue forecast as a whole has been 4.2%. 

Credit Suisse noted that 21Vianet's "successful monetisation of cloud revenues is proceeding faster than expected." Approximately $26 million of the $40 million in cloud revenues guided for the fiscal year 2014 is already "secure" in the pipeline, which makes the guidance figure conservative.

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Separately, TheStreet Ratings team rates 21VIANET GROUP INC as a "hold" with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:

"We rate 21VIANET GROUP INC (VNET) 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 solid stock price performance, robust revenue growth and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, disappointing return on equity and generally higher debt management risk."

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

  • Compared to its price level of one year ago, VNET is up 200.55% to its most recent closing price of 27.17. Looking ahead, our view is that this company's fundamentals should not have much impact in either direction, allowing the stock to generally move up or down based on the push and pull of the broad market.
  • The revenue growth came in higher than the industry average of 16.4%. Since the same quarter one year prior, revenues rose by 31.4%. 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.
  • 21VIANET GROUP INC has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. 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, 21VIANET GROUP INC increased its bottom line by earning $0.15 versus $0.06 in the prior year. This year, the market expects an improvement in earnings ($0.62 versus $0.15).
  • The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. Compared to other companies in the Internet Software & Services industry and the overall market, 21VIANET GROUP INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • 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 Internet Software & Services industry. The net income has significantly decreased by 215.3% when compared to the same quarter one year ago, falling from $1.89 million to -$2.17 million.
  • You can view the full analysis from the report here: VNET 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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