Analysts' Actions: Adobe DaVita, Guidewire Software

NEW YORK (TheStreet) -- RATINGS CHANGES

Adobe (ADBE) was upgraded to buy at TheStreet Ratings.

DaVita (DVA) was initiated at Jefferies with a buy rating. Diversifying its business model by leveraging on trends in health care, Jefferies said. Twelve-month price target is $86.

Guidewire Software (GWRE) was upgraded to hold at TheStreet Ratings.


Now let's look at TheStreet Ratings' take on DaVita.

TheStreet Ratings team rates DAVITA HEALTHCARE PARTNERS as a Buy with a ratings score of A. TheStreet Ratings Team has this to say about their recommendation:

"We rate DAVITA HEALTHCARE PARTNERS (DVA) 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 increase in stock price during the past year, impressive record of earnings per share growth, compelling growth in net income, revenue growth and notable return on equity. We feel these strengths outweigh the fact that the company shows low profit margins."

Highlights from the analysis by TheStreet Ratings Team goes as follows:
  • Compared to where it was a year ago today, the stock is now trading at a higher level, reflecting both the market's overall trend during that period and the fact that the company's earnings growth has been robust. 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.
  • DAVITA HEALTHCARE PARTNERS reported significant earnings per share improvement 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, DAVITA HEALTHCARE PARTNERS increased its bottom line by earning $2.90 versus $2.73 in the prior year. This year, the market expects an improvement in earnings ($3.62 versus $2.90).
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Health Care Providers & Services industry. The net income increased by 507.6% when compared to the same quarter one year prior, rising from $30.16 million to $183.29 million.
  • Despite its growing revenue, the company underperformed as compared with the industry average of 16.9%. Since the same quarter one year prior, revenues slightly increased by 7.5%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • 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 Health Care Providers & Services industry and the overall market, DAVITA HEALTHCARE PARTNERS's return on equity exceeds that of both the industry average and the S&P 500.

Editor's note: To see analysts' stock comments and changes to price targets and earnings estimates, go to "Street Notes" which is available only to Real Money subscribers. To find out how to become a subscriber, please click here.

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