Will This Downgrade Hurt Xilinx (XLNX) Stock Today?

NEW YORK (TheStreet) -- Xilinx (XLNX) stock has been downgraded to "neutral" from "buy" with a $49 price target, Goldman Sachs said Monday. The firm said the company lacks visibility heading into the second half of the year.

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Separately, TheStreet Ratings team rates XILINX INC as a Buy with a ratings score of A. TheStreet Ratings Team has this to say about their recommendation:

"We rate XILINX INC (XLNX) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its revenue growth, increase in stock price during the past year, growth in earnings per share, notable return on equity and expanding profit margins. Although no company is perfect, currently we do not see any significant weaknesses which are likely to detract from the generally positive outlook."

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

  • The revenue growth came in higher than the industry average of 3.1%. Since the same quarter one year prior, revenues rose by 16.1%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • The stock has risen over the past year as investors have generally rewarded the company for its earnings growth and other positive factors like the ones we have cited in this report. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
  • XILINX INC has improved earnings per share by 12.8% 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 two years. We feel that this trend should continue. During the past fiscal year, XILINX INC increased its bottom line by earning $2.19 versus $1.78 in the prior year. This year, the market expects an improvement in earnings ($2.44 versus $2.19).
  • Current return on equity exceeded its ROE from the same quarter one year prior. This is a clear sign of strength within the company. Compared to other companies in the Semiconductors & Semiconductor Equipment industry and the overall market, XILINX INC's return on equity exceeds that of both the industry average and the S&P 500.
  • The gross profit margin for XILINX INC is rather high; currently it is at 69.88%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 25.25% is above that of the industry average.
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