Will This Coverage Initiation Help IRSA Investments & Representations (IRS) Stock Today?

NEW YORK (TheStreet) -- IRSA Investments & Representations SA (IRS) had coverage initiated on its shares with an "overweight" rating by Morgan Stanley  (MS) on Monday. The firm set a $16 price target for the company.

IRSA Investments & Representations was up 2.3% to $11.49 in early trading Monday.

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Analysts at Morgan Stanley see an investment in IRSA as an investment in the Argentinian real estate market. 

"We believe that an investment in IRSA would allow investors access to some of Argentina's highest quality real estate, most of which is based on malls, which under a normalized macro regime would trade at a meaningful premium to current values," Morgan Stanley said.

TheStreet Ratings team rates IRSA INVERSIONES Y REPSTN SA as a Hold with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:

"We rate IRSA INVERSIONES Y REPSTN SA (IRS) 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 good cash flow from operations, expanding profit margins and solid stock price performance. However, as a counter to these strengths, we also find weaknesses including feeble growth in the company's earnings per share, deteriorating net income and generally higher debt management risk."

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

  • Net operating cash flow has increased to $29.63 million or 31.55% when compared to the same quarter last year. In addition, IRSA INVERSIONES Y REPSTN SA has also vastly surpassed the industry average cash flow growth rate of -82.98%.
  • The gross profit margin for IRSA INVERSIONES Y REPSTN SA is rather high; currently it is at 61.25%. 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 -8.65% is in-line with the industry average.
  • Compared to where it was a year ago today, the stock is now trading at a higher level, regardless of the company's weak earnings results. Despite the fact that it has already risen in the past year, there is currently no conclusive evidence that warrants the purchase or sale of this stock.
  • IRSA INVERSIONES Y REPSTN SA 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. Earnings per share have declined over the last two years. We anticipate that this should continue in the coming year. During the past fiscal year, IRSA INVERSIONES Y REPSTN SA reported lower earnings of $0.76 versus $1.07 in the prior year. For the next year, the market is expecting a contraction of 246.1% in earnings (-$1.11 versus $0.76).
  • 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 Real Estate Management & Development industry. The net income has significantly decreased by 124.3% when compared to the same quarter one year ago, falling from $36.86 million to -$8.97 million.
  • You can view the full analysis from the report here: IRS Ratings Report
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