Analysts' Actions: CIT, Dynegy, Pitney Bowes, Reynolds American

NEW YORK (TheStreet) -- RATINGS CHANGES

AmerisourceBergen (ABC) was downgraded to hold at TheStreet Ratings.

AbbVie (ABBV) was upgraded at UBS to buy from neutral. Reflective of accretive Shire (SHPG) deal, UBS said. Twelve-month price target is $67.

CIT (CIT) was upgraded at Morgan Stanley to overweight from equal-weight. Twelve-month price target is $57. One West acquisition can boost profits, Morgan Stanley said.

Cabot Oil & Gas (COG) was downgraded at Oppenheimer to perform from outperform. Lack of pipeline capacity could stifle production growth into 2016, Oppenheimer said.

Cisco (CSCO) was downgraded at Pacific Crest to sector perform from outperform. Stock appears fully valued, as the company is attempting to enter new markets through acquisitions, Pacific Crest said.

DSW (DSW) was downgraded at Sterne Agee to underperform. Twelve-month price target is $23. Estimates were also cut, as the company will likely continue to lower guidance, Sterne Agee said.

Dynegy (DYN) was upgraded at Goldman Sachs to buy. Valuation call, as the stock is down 20% in recent weeks, Goldman Sachs said.

El Paso Electric (EE) was downgraded at Jefferies to hold from buy. Valuation call with 12-month price target of $39, Jefferies said.

Informatica (INFA) was upgraded at Nomura to buy from neutral. Valuation call, based on a 12-month price target of $41, Nomura said.

Lear (LEA) was downgraded at Deutsche Bank to hold from buy. Valuation call, based on a $100 price target, Deutsche Bank said.

Monster Beverage (MNST) was downgraded at UBS to neutral from buy. Shorter runway and discounted margin progression, UBS said. Twelve-month price target is $73.

NextEra Energy Partners (NEP) was initiated at Barclays with an overweight rating. Twelve-month price target is $40. Predicted 12%-15% distribution growth over the next three years, Barclays said.

Pitney Bowes (PBI) was upgraded at Brean Murray to buy from hold. Twelve-month price target is $33. Company can grow earnings and deserves a higher multiple, Brean Murray said.

PG&E (PCG) was downgraded at Goldman Sachs to sell. Earnings could miss consensus expectations and the company will likely need to raise equity, Goldman Sachs said.

Pfizer (PFE) was downgraded at BMO Capital to market perform. Twelve-month price target is $31. Company has limited growth prospects, BMO Capital said.

Reynolds American (RAI) was upgraded at RBC to top pick from outperform. Lorillard (LO) deal will likely close on time and the stock can potentially move up toward $80, RBC said.

Interface (TILE) was upgraded to buy at TheStreet Ratings.

Time Warner Cable (TWC) upgraded at Wunderlich to buy from hold. Twelve-month price target is $190. See a 60% likelihood of the Comcast merger being approved, which should improve the company's business practices, Wunderlich said.

Wellcare (WCG) was upgraded at Sterne Agee to neutral. Twelve-month price target is $69. Valuation call, as reserve metrics have showed improvement, Sterne Agee.

Xerox (XRX) was upgraded at J.P. Morgan to neutral from from underweight. Headwinds are easing in the government health care business, J.P. Morgan said.

Zimmer (ZMH) was upgraded at Oppenheimer to outperform from perform. Twelve-month price target is $118. Biomet deal should add to earnings, beginning in 2015, Oppenheimer said.

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

"We rate PITNEY BOWES INC (PBI) 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 solid stock price performance, revenue growth and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, weak operating cash flow and generally higher debt management risk."

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

  • Compared to its closing price of one year ago, PBI's share price has jumped by 86.45%, exceeding the performance of the broader market during that same time frame. Regarding the stock's future course, our hold rating indicates that we do not recommend additional investment in this stock despite its gains in the past year.
  • Despite its growing revenue, the company underperformed as compared with the industry average of 5.0%. Since the same quarter one year prior, revenues slightly increased by 3.1%. 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 gross profit margin for PITNEY BOWES INC is rather high; currently it is at 63.04%. Regardless of PBI's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 4.76% trails the industry average.
  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Commercial Services & Supplies industry. The net income has significantly decreased by 33.8% when compared to the same quarter one year ago, falling from $67.51 million to $44.67 million.
  • Net operating cash flow has decreased to $105.62 million or 20.08% when compared to the same quarter last year. In addition, when comparing the cash generation rate to the industry average, the firm's growth is significantly lower.

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

"We rate REYNOLDS AMERICAN INC (RAI) 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, notable return on equity, expanding profit margins and increase in stock price during the past year. 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 3.3%. Since the same quarter one year prior, revenues slightly increased by 2.8%. 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 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. Compared to other companies in the Tobacco industry and the overall market, REYNOLDS AMERICAN INC's return on equity significantly exceeds that of both the industry average and the S&P 500.
  • REYNOLDS AMERICAN INC's earnings per share declined by 31.5% 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, REYNOLDS AMERICAN INC increased its bottom line by earning $3.14 versus $2.24 in the prior year. This year, the market expects an improvement in earnings ($3.36 versus $3.14).
  • The gross profit margin for REYNOLDS AMERICAN INC is rather high; currently it is at 53.13%. Despite the high profit margin, it has decreased significantly from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 18.75% trails the industry average.
  • Compared to where it was a year ago today, the stock is now trading at a higher level, regardless of the company's weak earnings results. Looking ahead, the stock's 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 the other strengths this company displays justify these higher price levels.

This article was written by a staff member of TheStreet.

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