NEW YORK (TheStreet) -- Youku Tudou (YOKU) shares were upgraded to "neutral" from "underweight" by analysts at HSBC (HSBC) on Tuesday.
The firm maintained its $22 price target on the Chinese Internet television company's shares.
Analysts cited the recent pullback on the company's shares as the reason for the more optimistic outlook.
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Separately, TheStreet Ratings team rates YOUKU TUDOU INC as a Hold with a ratings score of C-. TheStreet Ratings Team has this to say about their recommendation:
"We rate YOUKU TUDOU INC (YOKU) 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 robust revenue growth, largely solid financial position with reasonable debt levels by most measures and good cash flow from operations. However, as a counter to these strengths, we also find weaknesses including disappointing return on equity, poor profit margins and feeble growth in the company's earnings per share."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The revenue growth came in higher than the industry average of 21.3%. Since the same quarter one year prior, revenues rose by 35.6%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- YOKU 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. Along with this, the company maintains a quick ratio of 3.12, which clearly demonstrates the ability to cover short-term cash needs.
- The stock price has risen over the past year, but, despite its earnings growth and some other positive factors, it has underperformed the S&P 500 so far. 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.
- 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, YOUKU TUDOU INC's return on equity significantly trails that of both the industry average and the S&P 500.
- The gross profit margin for YOUKU TUDOU INC is currently extremely low, coming in at 12.22%. It has decreased significantly from the same period last year. Along with this, the net profit margin of -32.08% is significantly below that of the industry average.
- You can view the full analysis from the report here: YOKU Ratings Report