NEW YORK (TheStreet) -- Proofpoint (PFPT) shares were upgraded to "buy" from "neutral" by analysts at Sterne Agee on Monday while setting a price target of $40 on the shares.
The firm believes that the data protection solutions provider's new set of products will expand its customer base and drive sales growth in the near term.
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Separately, TheStreet Ratings team rates PROOFPOINT INC as a Sell with a ratings score of D+. TheStreet Ratings Team has this to say about their recommendation:
"We rate PROOFPOINT INC (PFPT) 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 deteriorating net income, generally high debt management risk and feeble growth in its earnings per share."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- 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 Software industry. The net income has significantly decreased by 125.2% when compared to the same quarter one year ago, falling from -$6.39 million to -$14.40 million.
- The debt-to-equity ratio is very high at 2.14 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. Regardless of the company's weak debt-to-equity ratio, PFPT has managed to keep a strong quick ratio of 2.29, which demonstrates the ability to cover short-term cash needs.
- PROOFPOINT 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. The company has reported a trend of declining earnings per share over the past two years. However, the consensus estimate suggests that this trend should reverse in the coming year. During the past fiscal year, PROOFPOINT INC reported poor results of -$0.78 versus -$0.66 in the prior year. This year, the market expects an improvement in earnings (-$0.43 versus -$0.78).
- 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. Compared to other companies in the Software industry and the overall market, PROOFPOINT INC's return on equity significantly trails that of both the industry average and the S&P 500.
- The gross profit margin for PROOFPOINT INC is currently very high, coming in at 74.15%. Regardless of PFPT's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, PFPT's net profit margin of -33.70% significantly underperformed when compared to the industry average.
- You can view the full analysis from the report here: PFPT Ratings Report