Will This Upgrade Help Informatica (INFA) Stock Today?

Story updated at 9:45 a.m. to reflect market activity.

NEW YORK (TheStreet) -- Informatica (INFA) was upgraded to "neutral" from "underperform" by Bank of America/Merrill Lynch Monday.

Informatica fell -0.5% to $35.75 in morning trading.

The upgrade was a valuation call based on a $37 price target for the business software company according to Bank of America/Merrill Lynch analysts.

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Separately, TheStreet Ratings team rates INFORMATICA CORP as a Hold with a ratings score of C+. TheStreet Ratings Team has this to say about their recommendation:

"We rate INFORMATICA CORP (INFA) 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 increase in net income. However, as a counter to these strengths, we also find weaknesses including disappointing return on equity and weak operating cash flow."

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

  • INFA's revenue growth has slightly outpaced the industry average of 5.7%. Since the same quarter one year prior, revenues rose by 13.4%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • INFA has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign. To add to this, INFA has a quick ratio of 2.16, which demonstrates the ability of the company to cover short-term liquidity needs.
  • INFORMATICA CORP has improved earnings per share by 37.5% in the most recent quarter compared to 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, INFORMATICA CORP reported lower earnings of $0.77 versus $0.84 in the prior year. This year, the market expects an improvement in earnings ($1.63 versus $0.77).
  • 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. In comparison to the other companies in the Software industry and the overall market, INFORMATICA CORP's return on equity is significantly below that of the industry average and is below that of the S&P 500.
  • Net operating cash flow has decreased to $62.74 million or 16.98% when compared to the same quarter last year. In addition, when comparing the cash generation rate to the industry average, the firm's growth is significantly lower.
  • You can view the full analysis from the report here: INFA 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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