NEW YORK (TheStreet) -- Hittite Microwave (HITT) stock has been downgraded to "neutral" from "buy," D.A. Davidson said Tuesday. The firm said the recent bid from Analog Devices (ADI) to purchase the company for $78 a share will likely close as expected in August.
"We believe $78 per share is a very attractive price for HITT as it represents a total valuation of $2.5 billion and an enterprise value of $2.0 billion," analysts wrote in the note. "Thus, we have increased our price target from $70 to the $78 offer price but are downgrading the stock ... as shares are already trading at this price."
Separately, TheStreet Ratings team rates HITTITE MICROWAVE CORP as a Buy with a ratings score of B-. TheStreet Ratings Team has this to say about their recommendation:
"We rate HITTITE MICROWAVE CORP (HITT) a BUY. This is driven by a number of strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures, good cash flow from operations, increase in stock price during the past year and expanding profit margins. We feel these strengths outweigh the fact that the company has had sub par growth in net income."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- HITT's revenue growth has slightly outpaced the industry average of 3.2%. Since the same quarter one year prior, revenues slightly increased by 4.3%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
- HITT 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 22.39, which clearly demonstrates the ability to cover short-term cash needs.
- Net operating cash flow has increased to $27.21 million or 16.54% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of 3.91%.
- Compared to where it was 12 months ago, the stock is up, but it has so far lagged the appreciation in the S&P 500. Looking ahead, unless broad bear market conditions prevail, we still see more upside potential for this stock, despite the fact that it has already risen over the past year.
- HITTITE MICROWAVE CORP's earnings per share declined by 8.8% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, HITTITE MICROWAVE CORP increased its bottom line by earning $2.25 versus $2.22 in the prior year. This year, the market expects an improvement in earnings ($2.35 versus $2.25).
- You can view the full analysis from the report here: HITT Ratings Report