Tyco opened trading at $41.56 on Thursday. The firm set a price target of $48 on the shares.
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CLSA believes that Tyco stock is in position for a turnaround after years of decline based on a multiyear volume recovery plan.
"We expect Tyco to deliver significant margin and returns expansion over the next three years. Most of this improvement will be driven by cost-cutting and productivity benefits," analysts said.
Separately, TheStreet Ratings team rates TYCO INTERNATIONAL LTD as a Hold with a ratings score of C+. TheStreet Ratings Team has this to say about their recommendation:
"We rate TYCO INTERNATIONAL LTD (TYC) 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, impressive record of earnings per share growth and compelling growth in net income. 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:
- Powered by its strong earnings growth of 67.64% and other important driving factors, this stock has surged by 26.32% over the past year, outperforming the rise in the S&P 500 Index during the same period. Regarding the stock's future course, our hold rating indicates that we do not recommend additional investment in this stock despite its gains in the past year.
- TYCO INTERNATIONAL LTD reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past year. We feel that this trend should continue. This trend suggests that the performance of the business is improving. During the past fiscal year, TYCO INTERNATIONAL LTD turned its bottom line around by earning $1.12 versus -$0.72 in the prior year. This year, the market expects an improvement in earnings ($2.00 versus $1.12).
- The current debt-to-equity ratio, 0.32, is low and is below the industry average, implying that there has been successful management of debt levels. Although the company had a strong debt-to-equity ratio, its quick ratio of 0.71 is somewhat weak and could be cause for future problems.
- 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. When compared to other companies in the Commercial Services & Supplies industry and the overall market, TYCO INTERNATIONAL LTD'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: TYC Ratings Report
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