Why Intermolecular (IMI) Stock Is Surging On Monday

NEW YORK (TheStreet) -- Shares of Intermolecular Inc. (IMI) are skyrocketing 43.17% to $3.25 on Monday following the company's announcement that SanDisk Corp. (SNDK) and Toshiba have jointly elected to take an exclusive license, in a limited field, to Intermolecular's rights in the intellectual property developed under the collaborative development program and Intermolecular's background intellectual property.

Intermolecular, a company involved in the research and development in the semiconductor and clean energy industries, said the related technologies are being developed for next generation memory.

SanDisk's and Toshiba's CDP with Intermolecular is specifically aimed at developing memory products, materials, processes and device technologies.

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The license deal states SanDisk and Toshiba will prepay non-refundable royalties in quarterly installments over a predetermined period, according to Intermolecular.

TheStreet Ratings team rates INTERMOLECULAR INC as a Sell with a ratings score of D. TheStreet Ratings Team has this to say about their recommendation:

"We rate INTERMOLECULAR INC (IMI) a SELL. This is driven by a number of negative factors, which we believe should have a greater impact than any strengths, and could make it more difficult for investors to achieve positive results compared to most of the stocks we cover. The company's weaknesses can be seen in multiple areas, such as its feeble growth in its earnings per share, deteriorating net income, disappointing return on equity, weak operating cash flow and generally disappointing historical performance in the stock itself."

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

  • INTERMOLECULAR 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. Earnings per share have declined over the last year. We anticipate that this should continue in the coming year. During the past fiscal year, INTERMOLECULAR INC reported poor results of -$0.20 versus -$0.01 in the prior year. For the next year, the market is expecting a contraction of 112.5% in earnings (-$0.43 versus -$0.20).
  • 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 Semiconductors & Semiconductor Equipment industry. The net income has significantly decreased by 159.2% when compared to the same quarter one year ago, falling from -$1.49 million to -$3.85 million.
  • 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. Compared to other companies in the Semiconductors & Semiconductor Equipment industry and the overall market, INTERMOLECULAR INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • Net operating cash flow has decreased to $2.05 million or 46.69% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
  • Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 74.89%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 166.66% compared to the year-earlier quarter. Naturally, the overall market trend is bound to be a significant factor. However, in one sense, the stock's sharp decline last year is a positive for future investors, making it cheaper (in proportion to its earnings over the past year) than most other stocks in its industry. But due to other concerns, we feel the stock is still not a good buy right now.
  • You can view the full analysis from the report here: IMI Ratings Report
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