Story updated at 9:55 a.m. to reflect market activity.
EMC fell -0.1% to $28.74 in morning trading.
The analyst firm also raised its EPS estimates for the company through 2015. BMO analysts Keith Backman and Jung Pak cited EMCs higher sales and plans to buy back more stock as reasons for the higher numbers.
"We suspect EMC's announced increase of buybacks from $2 billion to $3 billion in 2014 is an opening move, not an end move," the analysts wrote. "With around $9 billion in net cash (including VMW's cash) and around $6 billion in FCF generating capability, we believe that EMC could take on more debt and meaningfully reduce its share count, in the absence of spinning or selling VMW."
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Separately, TheStreet Ratings team rates EMC CORP/MA as a Buy with a ratings score of B+. TheStreet Ratings Team has this to say about their recommendation:
"We rate EMC CORP/MA (EMC) a BUY. This is driven by a few notable 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, expanding profit margins, increase in stock price during the past year and notable return on equity. 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:
- Despite its growing revenue, the company underperformed as compared with the industry average of 2.1%. Since the same quarter one year prior, revenues slightly increased by 1.7%. 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.
- Although EMC's debt-to-equity ratio of 0.24 is very low, it is currently higher than that of the industry average. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.21, which illustrates the ability to avoid short-term cash problems.
- The gross profit margin for EMC CORP/MA is rather high; currently it is at 69.15%. It has increased from the same quarter the previous year. Despite the strong results of the gross profit margin, EMC's net profit margin of 7.15% significantly trails the industry average.
- EMC CORP/MA's earnings per share declined by 26.9% 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, EMC CORP/MA increased its bottom line by earning $1.33 versus $1.23 in the prior year. This year, the market expects an improvement in earnings ($1.90 versus $1.33).
- The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. In comparison to the other companies in the Computers & Peripherals industry and the overall market, EMC CORP/MA's return on equity is significantly below that of the industry average and is below that of the S&P 500.
- You can view the full analysis from the report here: EMC Ratings Report