Analysts' Actions: Hewlett-Packard, Monster Beverage, SeaWorld, More

NEW YORK (TheStreet) -- RATINGS CHANGES

Arrow Electronics (ARW) was downgraded at Goldman Sachs from buy to neutral. Twelve-month price target is $59. Increased inventory across the industry could hurt margins, Goldman Sachs said.

Hewlett-Packard (HPQ) was upgraded at Monness Crespi & Hardt to buy from neutral. Company has leverage to IT spending tailwinds, Monness Crespi & Hardt said.

Invensense (INVN) was downgraded at Goldman Sachs to neutral from buy. Valuation call, as the company lacks near-term catalysts, Goldman said. Twelve-month price target is $25.

Kapstone Paper (KS) was upgraded at Deutsche Bank to buy from hold. Twelve-month price target is $36. Stock has pulled back from recent highs, but the company has significant levers for earnings growth, Deutsche Bank said.

Key Energy Services (KEG) was downgraded to sell at TheStreet Ratings.

Liberty Property Trust (LPT) was downgraded to hold at TheStreet Ratings.

Monster Beverage (MNST)   was downgraded at Jefferies to hold. Twelve-month price target was raised to $95, but the ratings change is a valuation call, following the run-up on the Coca-Cola (KO) deal, Jefferies said.

SeaWorld (SEAS) was initiated with an outperform rating at Credit Suisse. Twelve-month price target is $23. Stock may bottom near current levels, Credit Suisse said.

Wellcare (WCG) was downgraded at Wedbush to neutral from outperform. Twelve-month price target is $65. Near-term takeover is less likely and the company will likely struggle to grow margins, Wedbush said.

Zimmer (ZMH) was upgraded at William Blair to outperform. Recent pullback has created a buying opportunity, as the Biomet deal should be accretive to earnings, William Blair said.

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Now let's look at TheStreet Ratings' take on some of these stocks.

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

"We rate MONSTER BEVERAGE CORP (MNST) 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, largely solid financial position with reasonable debt levels by most measures, impressive record of earnings per share growth, compelling growth in net income and expanding profit margins. We feel these strengths outweigh the fact that the company is trading at a premium valuation based on our review of its current price compared to such things as earnings and book value."

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

  • MNST's revenue growth has slightly outpaced the industry average of 4.4%. Since the same quarter one year prior, revenues slightly increased by 8.9%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • MNST has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign. Along with this, the company maintains a quick ratio of 3.03, which clearly demonstrates the ability to cover short-term cash needs.
  • MONSTER BEVERAGE CORP has improved earnings per share by 30.6% 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. We feel that this trend should continue. During the past fiscal year, MONSTER BEVERAGE CORP increased its bottom line by earning $1.96 versus $1.86 in the prior year. This year, the market expects an improvement in earnings ($2.59 versus $1.96).
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Beverages industry. The net income increased by 31.9% when compared to the same quarter one year prior, rising from $106.87 million to $141.00 million.
  • The gross profit margin for MONSTER BEVERAGE CORP is rather high; currently it is at 56.15%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 20.51% is above that of the industry average.

TheStreet Ratings team rates HEWLETT-PACKARD CO as a Hold with a ratings score of C+. TheStreet Ratings Team has this to say about their recommendation:

"We rate HEWLETT-PACKARD CO (HPQ) 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, impressive record of earnings per share growth and compelling growth in net income. However, as a counter to these strengths, we also find weaknesses including weak operating cash flow and poor profit margins."

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

  • Investors have apparently begun to recognize positive factors similar to those we have mentioned in this report, including earnings growth. This has helped drive up the company's shares by a sharp 30.94% over the past year, a rise that has exceeded that of the S&P 500 Index. 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.
  • HEWLETT-PACKARD CO has improved earnings per share by 20.0% 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 year. We feel that this trend should continue. This trend suggests that the performance of the business is improving. During the past fiscal year, HEWLETT-PACKARD CO turned its bottom line around by earning $2.62 versus -$6.45 in the prior year. This year, the market expects an improvement in earnings ($3.72 versus $2.62).
  • 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 Computers & Peripherals industry and the overall market on the basis of return on equity, HEWLETT-PACKARD CO has underperformed in comparison with the industry average, but has exceeded that of the S&P 500.
  • The gross profit margin for HEWLETT-PACKARD CO is currently lower than what is desirable, coming in at 27.20%. Regardless of HPQ's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, HPQ's net profit margin of 4.66% is significantly lower than the industry average.
  • Net operating cash flow has decreased to $2,995.00 million or 15.77% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.

This article was written by a staff member of TheStreet.

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