Why MicroStrategy (MSTR) Stock Is Gaining Today

NEW YORK (TheStreet) -- MicroStrategy (MSTR) shares are up 10.5% to $150.33 in early market trading on Tuesday after being upgraded to "market outperform" from "market perform" with a $170 price target by analysts at JMP Securities (JMP).

"We see the following catalysts for the company: a more investor-friendly stance; subscription business growth of almost 100% in the first half of 2014;  a stable maintenance stream and recurring revenue representing 57% of total revenue; and significant earnings power," analysts said about the enterprise software provider.

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Separately, TheStreet Ratings team rates MICROSTRATEGY INC as a Hold with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:

"We rate MICROSTRATEGY INC (MSTR) 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 reasonable valuation levels. However, as a counter to these strengths, we also find weaknesses including deteriorating net income and feeble growth in the company's earnings per share."

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

  • Compared to its closing price of one year ago, MSTR's share price has jumped by 45.30%, exceeding the performance of the broader market during that same time frame. Although MSTR had significant growth over the past year, our hold rating indicates that we do not recommend additional investment in this stock at the current time.
  • Despite its growing revenue, the company underperformed as compared with the industry average of 10.5%. Since the same quarter one year prior, revenues slightly increased by 5.9%. 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 MICROSTRATEGY INC is currently very high, coming in at 80.92%. 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 -4.70% is in-line with the industry average.
  • MICROSTRATEGY INC's earnings per share declined by 23.9% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. We feel it is likely to report a decline in earnings in the coming year. During the past fiscal year, MICROSTRATEGY INC increased its bottom line by earning $2.35 versus $2.00 in the prior year. For the next year, the market is expecting a contraction of 63.0% in earnings ($0.87 versus $2.35).
  • 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 Software industry. The net income has significantly decreased by 112.6% when compared to the same quarter one year ago, falling from $51.59 million to -$6.48 million.
  • You can view the full analysis from the report here: MSTR Ratings Report'
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