Story updated at 9:55 a.m. to reflect market activity.
Trulia fell -2.7% to $63.28 in morning trading.
The firm reiterated its "equal weight" rating for the company. The new target price is driven by Zillow's (Z) acquisition of Trulia with a 25% premium to the company's Friday closing price.
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Separately, TheStreet Ratings team rates TRULIA INC as a Sell with a ratings score of D+. TheStreet Ratings Team has this to say about their recommendation:
"We rate TRULIA INC (TRLA) a SELL. This is driven by some concerns, which we believe should have a greater impact than any strengths, and could make it more difficult for investors to achieve positive results compared to most of the stocks we cover. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income and feeble growth in its earnings per share."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- 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 Internet Software & Services industry. The net income has significantly decreased by 664.4% when compared to the same quarter one year ago, falling from -$1.98 million to -$15.15 million.
- TRULIA INC has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. The company has reported a trend of declining earnings per share over the past year. However, the consensus estimate suggests that this trend should reverse in the coming year. During the past fiscal year, TRULIA INC reported poor results of -$0.50 versus -$0.12 in the prior year. This year, the market expects an improvement in earnings (-$0.36 versus -$0.50).
- TRLA's debt-to-equity ratio of 0.61 is somewhat low overall, but it is high when compared to the industry average, implying that the management of the debt levels should be evaluated further. Even though the debt-to-equity ratio shows mixed results, the company's quick ratio of 6.96 is very high and demonstrates very strong liquidity.
- Compared to other companies in the Internet Software & Services industry and the overall market, TRULIA INC's return on equity significantly trails that of both the industry average and the S&P 500.
- The gross profit margin for TRULIA INC is currently very high, coming in at 92.95%. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of -27.80% is in-line with the industry average.
- You can view the full analysis from the report here: TRLA Ratings Report