Will This Analyst Downgrade Hurt Team Health (TMH) Stock Today? (Update)

Update (9:35 a.m.): Updated with Friday market open information.

NEW YORK ( TheStreet) --  Deustche downgraded  Team Health  ( TMH) to "hold" from "buy" and set a $53 price target based on valuation.

The stock was down 1.77% to $51.04 at 9:34 a.m. on Friday.

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Separately, TheStreet Ratings team rates TEAM HEALTH HOLDINGS INC as a "buy" with a ratings score of A-. TheStreet Ratings Team has this to say about their recommendation:

"We rate TEAM HEALTH HOLDINGS INC (TMH) 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 impressive record of earnings per share growth, compelling growth in net income, revenue growth, solid stock price performance and expanding profit margins. We feel these strengths outweigh the fact that the company shows weak operating cash flow."

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

  • TEAM HEALTH HOLDINGS INC has improved earnings per share by 26.9% 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, TEAM HEALTH HOLDINGS INC increased its bottom line by earning $1.23 versus $0.93 in the prior year. This year, the market expects an improvement in earnings ($2.20 versus $1.23).
  • The net income growth from the same quarter one year ago has significantly exceeded that of the Health Care Providers & Services industry average, but is less than that of the S&P 500. The net income increased by 31.3% when compared to the same quarter one year prior, rising from $18.15 million to $23.85 million.
  • Despite its growing revenue, the company underperformed as compared with the industry average of 16.8%. Since the same quarter one year prior, revenues slightly increased by 9.7%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • Powered by its strong earnings growth of 26.92% and other important driving factors, this stock has surged by 30.46% over the past year, outperforming the rise in the S&P 500 Index during the same period. We feel that the stock's sharp appreciation over the last year has driven it to a price level which is now somewhat expensive compared to the rest of its industry. The other strengths this company shows, however, justify the higher price levels.
  • The gross profit margin for TEAM HEALTH HOLDINGS INC is rather high; currently it is at 52.76%. Regardless of TMH's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 2.15% trails the industry average.
  • You can view the full analysis from the report here: TMH Ratings Report

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

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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