Analysts' Actions: Boeing, Verizon, CIT, More

NEW YORK (TheStreet) -- RATINGS CHANGES

Boeing (BA) was downgraded to neutral from buy at Bank of America/Merrill Lynch. This was a valuation call, based on a $140 12-month price target, said BofA/Merrill.

CIT (CIT) was upgraded to hold at TheStreet Ratings.

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CyrusOne (CONE) was initiated with an equal weight rating at Barclays. The company is driven by strong underlying data traffic trends, but tempered with rising competitive pressures, Barclays said. $29 12-month price target.

Credit Suisse (CS) was downgraded to sell at TheStreet Ratings.

Equinix (EQIX) was initiated with an equal weight rating at Barclays. Strong data traffic trends though a complex sales cycle may temper long term enterprise opportunity, said Barclays. $220 12-month price target.

Freeport-McMoRan (FCX) was downgraded to neutral from buy at Bank of America/Merrill Lynch. $40 12-month price target. The company is facing uncertainty in Indonesia, BofA/Merrill said.

Health Net (HNT) was upgraded to buy from underperform at Bank of America/Merrill Lynch. Margins on new growth will likely be better than expected, BofA/Merrill said. $59 12-month price target.

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Owens Corning (OC) was downgraded to hold from buy at Stifel Nicolaus. The company appears to have lost market share in roofing and will likely see lower margins, Stifel said.

Pepsico (PEP) was upgraded to buy from hold at Stifel Nicolaus. The company is entering a period of positive earnings revisions, said Stifel.

Potlatch (POT) was downgraded to neutral at DA Davidson. The company is seeing lower earnings, DA Davidson said. $45 12-month price target.

Progress Software (PRGS) was upgraded to buy at TheStreet Ratings.

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Theravance (THRX) was downgraded to neutral at Bank of America/Merrill Lynch. $31 12-month price target. Pricing headwinds could continue to impact the company, said BofA/Merrill.

Verizon (VZ) was upgraded to outperform from market perform at FBR Capital Markets. $57 12-month price target. The company is seeing continued momentum in wireless and a moderating decline in the wireline business, said FBR.

Xilinx (XLNX) was upgraded to buy from hold at Argus. This was a valuation call, following the sharp drop in the stock, Argus said.

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

"We rate VERIZON COMMUNICATIONS INC (VZ) 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, notable return on equity, compelling growth in net income, expanding profit margins and impressive record of earnings per share growth. We feel these strengths outweigh the fact that the company has had generally high debt management risk by most measures that we evaluated."

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

  • VZ's revenue growth has slightly outpaced the industry average of 4.0%. Since the same quarter one year prior, revenues slightly increased by 5.7%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. Compared to other companies in the Diversified Telecommunication Services industry and the overall market, VERIZON COMMUNICATIONS INC's return on equity significantly exceeds that of both the industry average and the S&P 500.
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Diversified Telecommunication Services industry. The net income increased by 87.6% when compared to the same quarter one year prior, rising from $2,246.00 million to $4,214.00 million.
  • The gross profit margin for VERIZON COMMUNICATIONS INC is rather high; currently it is at 61.61%. Regardless of VZ's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, VZ's net profit margin of 13.38% compares favorably to the industry average.
  • VERIZON COMMUNICATIONS INC has improved earnings per share by 30.8% 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. However, we anticipate underperformance relative to this pattern in the coming year. During the past fiscal year, VERIZON COMMUNICATIONS INC increased its bottom line by earning $4.00 versus $0.31 in the prior year. For the next year, the market is expecting a contraction of 11.5% in earnings ($3.54 versus $4.00).

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

"We rate BOEING CO (BA) 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, good cash flow from operations, largely solid financial position with reasonable debt levels by most measures, solid stock price performance 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:

  • BA's revenue growth has slightly outpaced the industry average of 3.1%. Since the same quarter one year prior, revenues slightly increased by 8.3%. 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.
  • Net operating cash flow has significantly increased by 112.21% to $1,112.00 million when compared to the same quarter last year. In addition, BOEING CO has also vastly surpassed the industry average cash flow growth rate of 43.40%.
  • BOEING CO's earnings per share declined by 11.1% 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, BOEING CO increased its bottom line by earning $5.97 versus $5.12 in the prior year. This year, the market expects an improvement in earnings ($7.70 versus $5.97).
  • The debt-to-equity ratio is somewhat low, currently at 0.62, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels. Even though the company has a strong debt-to-equity ratio, the quick ratio of 0.38 is very weak and demonstrates a lack of ability to pay short-term obligations.
  • 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. When compared to other companies in the Aerospace & Defense industry and the overall market, BOEING CO's return on equity exceeds that of the industry average and significantly exceeds that of the S&P 500.
This article was written by a staff member of TheStreet.

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