Analysts' Actions: McDonald's, Xilinx, Microsoft, DuPont, More

NEW YORK (TheStreet) -- RATINGS CHANGES

Cardtronics (CATM) was upgraded at JP Morgan to overweight from neutral. The Welch ATM acquisition creates bullish sentiment, JP Morgan said. $45 12-month price target.

Cubist Pharmaceuticals (CBST) was downgraded at JMP Securities to market perform from outperform. Cubicin growth has softened, JMP said.

DuPont (DD) was downgraded to neutral from overweight at JP Morgan. Estimates were also lowered due to reduced cash flow from the Agricultural operations.

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Brinker (EAT) was downgraded at RBC Capital to sector perform from outperform. $49 12-month price target. The company is leveraged to lackluster industry trends, RBC said.

FirstMerit (FMER) was downgraded to neutral at JP Morgan. Accretion headwinds are too strong to outweigh solid loan growth, JP Morgan said.

Gogo (GOGO) was initiated as a sell at TheStreet Ratings.

Hexcel (HXL) was downgraded to hold from buy at Canaccord Genuity. This was a valuation call, based on a $46 12-month price target, Canaccord said.

Juniper (JNPR) was downgraded to neutral from buy at Bank of America/Merrill Lynch. $28 12-month price target. The company offered weak guidance, BofA/Merrill said.

Lennox (LII) was upgraded to buy from neutral at Goldman Sachs. $102 12-month price target. The company is cutting costs and is leveraged to strong residential markets, said Goldman.

Liberty Property Trust (LPT) was downgraded to neutral from buy at UBS. The company is demonstrating lack of execution on acquisitions, development and internal growth. $36 12-month price target, said UBS.

McDonald's (MCD) was downgraded to neutral from outperform at Robert Baird. $98 12-month price target. It will be more difficult to restore positive operating trends than previously anticipated, Baird said.

McDonald's (MCD) was downgraded to neutral at Sterne Agee. Estimates were also cut, as the company lacks near-term catalysts, Sterne Agee said.

Allscripts Healthcare (MDRX) was upgraded to buy at Jefferies. $21 12-month price target. The company has a strong discounted cash flow model and appears attractive, based on historical and peer trading multiples, Jefferies said.

Microsoft (MSFT) was upgraded to neutral from underperform at Bank of America/Merrill Lynch. $47 12-month price target. The company is keeping a tight lid on costs, said BofA/Merrill.

Microsoft (MSFT) was upgraded to outperform at Pacific Crest. $54 12-month price target. The company is moving into the cloud and the Nokia dilution is complete, Pacific Crest said.

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Netflix (NFLX) was upgraded to buy at TheStreet Ratings.

PDC Energy (PDCE) was upgraded to outperform from sector perform at Howard Weil. $86 12-month price target. The stock is attractive following a 23% pullback, Howard Weil said.

United Technologies (UTX) was downgraded to market perform at Wells Fargo. The company is seeing slower sales growth and may fail to meet 2015 expectations, Wells Fargo said.

Xilinx (XLNX) was downgraded to market perform from outperform at BMO Capital. $42 12-month price target. Estimates were also cut, as market share appears to have peaked, said BMO.

Xilinx (XLNX) was downgraded to neutral at Bank of America/Merrill Lynch. China inventory is mounting, said BofA/Merrill. $48 12-month price target.

Xilinx (XLNX) was downgraded to market perform at William Blair. 4G ramp is uncertain, which could limit near-term earnings potential, William Blair said.

Zillow (Z) was upgraded to hold at TheStreet Ratings.

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

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

"We rate XILINX INC (XLNX) 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 revenue growth, growth in earnings per share, notable return on equity, expanding profit margins and good cash flow from operations. Although the company may harbor some minor weaknesses, we feel they are unlikely to have a significant impact on results."

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

  • XLNX's revenue growth has slightly outpaced the industry average of 9.7%. Since the same quarter one year prior, revenues rose by 16.1%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • XILINX INC has improved earnings per share by 12.8% 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, XILINX INC increased its bottom line by earning $2.19 versus $1.78 in the prior year. This year, the market expects an improvement in earnings ($2.45 versus $2.19).
  • 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 Semiconductors & Semiconductor Equipment industry and the overall market, XILINX INC's return on equity exceeds that of both the industry average and the S&P 500.
  • The gross profit margin for XILINX INC is rather high; currently it is at 69.88%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 25.25% is above that of the industry average.
  • Net operating cash flow has slightly increased to $189.38 million or 9.05% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of -8.13%.

TheStreet Ratings team rates MCDONALD'S CORP as a Buy with a ratings score of A. TheStreet Ratings Team has this to say about their recommendation:

"We rate MCDONALD'S CORP (MCD) 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 revenue growth, largely solid financial position with reasonable debt levels by most measures, expanding profit margins, good cash flow from operations and notable return on equity. We feel these strengths outweigh the fact that the company has had lackluster performance in the stock itself."

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

  • MCD's revenue growth has slightly outpaced the industry average of 8.4%. Since the same quarter one year prior, revenues slightly increased by 1.4%. 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.
  • The debt-to-equity ratio is somewhat low, currently at 0.86, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.28, which illustrates the ability to avoid short-term cash problems.
  • 43.68% is the gross profit margin for MCDONALD'S CORP which we consider to be strong. It has increased from the same quarter the previous year. Along with this, the net profit margin of 17.98% is above that of the industry average.
  • Net operating cash flow has increased to $1,907.30 million or 13.06% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of -21.57%.
  • MCDONALD'S CORP' earnings per share from the most recent quarter came in slightly below the year earlier quarter. 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, MCDONALD'S CORP increased its bottom line by earning $5.56 versus $5.36 in the prior year. This year, the market expects an improvement in earnings ($5.75 versus $5.56).

This article was written by a staff member of TheStreet.

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