Why InvenSense (INVN) Stock Is Up Today

NEW YORK (TheStreet) -- InvenSense (INVN) was gaining 4.2% to $22.61 Monday after Pacific Crest increased its price target to $26 from $22.

Analysts John Vinh and Kevin Chen raised the price target and estimates for InvenSense. After a trip to Asia the analysts wrote "we are more confident that the iPhone 6 will support NFC, the larger-screen iPhone 6 (5.5") will support OIS (optical image stabilization) and Renesas SP drivers are expected to maintain their primary incumbent position in the upcoming iPhone 6."

Pacifci Crest reiterated its "outperform" rating for InvenSense.

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Separately, TheStreet Ratings team rates INVENSENSE INC as a Hold with a ratings score of C-. TheStreet Ratings Team has this to say about their recommendation:

"We rate INVENSENSE INC (INVN) 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 revenue growth, largely solid financial position with reasonable debt levels by most measures and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, disappointing return on equity and premium valuation."

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

  • Despite its growing revenue, the company underperformed as compared with the industry average of 9.0%. Since the same quarter one year prior, revenues slightly increased by 6.9%. 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.
  • Despite currently having a low debt-to-equity ratio of 0.43, it is higher than that of the industry average, inferring that management of debt levels may need to be evaluated further. Even though the debt-to-equity ratio shows mixed results, the company's quick ratio of 4.94 is very high and demonstrates very strong liquidity.
  • The gross profit margin for INVENSENSE INC is rather high; currently it is at 51.07%. Regardless of INVN's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, INVN's net profit margin of -9.54% significantly underperformed when compared to the industry average.
  • Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Electronic Equipment, Instruments & Components industry and the overall market, INVENSENSE INC's return on equity significantly trails that of both the industry average and the S&P 500.

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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