Analysts' Actions: Google, GoPro, Kodiak, Kroger, PetSmart, Yahoo!

NEW YORK (TheStreet) -- RATINGS CHANGES

Fortress Investment Group (FIG) was upgraded to buy at TheStreet Ratings.

Google (GOOGL) was initiated with an outperform rating at FBR Capital Markets. Twelve-month price target is $674. Company can continue to expand its competitive advantage, FBR Capital said.

GoPro (GPRO) was initiated with an outperform rating at JMP Securities. Twelve-month price target is $60. Company is a market leader and growth can accelerate, JMP Securities said.

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Kodiak (KOG) was upgraded at Wunderlich to buy from hold. Twelve-month price target is $17.70. Stock appears attractive, following the deal terms and Whiting's target, Wunderlich said.

Kroger (KR) was upgraded at BMO Capital to outperform. Twelve-month price target is $58. Company has better visibility on potential margin expansion, BMO Capital said.

PetSmart (PETM) was upgraded at Morgan Stanley to equal-weight. Twelve-month price target is $71. Activist presence will likely help create shareholder value, Morgan Stanley said.

Tetra Tech (TTEK) was downgraded to hold at TheStreet Ratings.

Yahoo! (YHOO) was initiated with a market perform rating at FBR Capital Markets. Twelve-month price target is $37. Valuation will likely fade, after the company sells a portion of Alibaba, FBR Capital Markets said.

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Now let's look at TheStreet Ratings' take on some of these stocks.

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

"We rate GOOGLE INC (GOOGL) 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 robust revenue growth, largely solid financial position with reasonable debt levels by most measures and reasonable valuation levels. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself, disappointing return on equity and feeble growth in the company's earnings per share."

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 21.2%. Since the same quarter one year prior, revenues rose by 19.1%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • Although GOOGL's debt-to-equity ratio of 0.07 is very low, it is currently higher than that of the industry average. Along with this, the company maintains a quick ratio of 4.17, which clearly demonstrates the ability to cover short-term cash needs.
  • Net operating cash flow has increased to $4,391.00 million or 20.86% when compared to the same quarter last year. Despite an increase in cash flow, GOOGLE INC's average is still marginally south of the industry average growth rate of 23.17%.
  • GOOGL's stock share price has done very poorly compared to where it was a year ago: Despite any rallies, the net result is that it is down by 35.98%, which is also worse that the performance of the S&P 500 Index. Investors have so far failed to pay much attention to the earnings improvements the company has managed to achieve over the last quarter. Despite the heavy decline in its share price, this stock is still more expensive (when compared to its current earnings) than most other companies in its industry.
  • The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. When compared to other companies in the Internet Software & Services industry and the overall market, GOOGLE INC's return on equity is below that of both the industry average and the S&P 500.

TheStreet Ratings team rates YAHOO INC as a Buy with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation:

"We rate YAHOO INC (YHOO) a BUY. This is driven by multiple 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 largely solid financial position with reasonable debt levels by most measures, reasonable valuation levels, expanding profit margins and solid stock price performance. 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:

  • Although YHOO's debt-to-equity ratio of 0.09 is very low, it is currently higher than that of the industry average. Along with this, the company maintains a quick ratio of 3.20, which clearly demonstrates the ability to cover short-term cash needs.
  • The gross profit margin for YAHOO INC is currently very high, coming in at 83.44%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 27.50% is above that of the industry average.
  • Compared to its closing price of one year ago, YHOO's share price has jumped by 31.51%, exceeding the performance of the broader market during that same time frame. Looking ahead, the stock's sharp rise over the last year has already helped drive it to a level which is relatively expensive compared to the rest of its industry. We feel, however, that other strengths this company displays justify these higher price levels.
  • YAHOO INC's earnings per share declined by 17.1% in the most recent quarter compared to the same quarter a year ago. The company has suffered a declining pattern of earnings per share over the past year. However, we anticipate this trend reversing over the coming year. During the past fiscal year, YAHOO INC reported lower earnings of $1.26 versus $3.28 in the prior year. This year, the market expects an improvement in earnings ($1.62 versus $1.26).

This article was written by a staff member of TheStreet.

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