Analysts' Actions: American Eagle, International Rectifier, Intermune

NEW YORK (TheStreet) -- RATINGS CHANGES

American Eagle (AEO) was upgraded at Janney Montgomery to buy from neutral. Inventory levels appear to have stabilized and the company pays an attractive 4% dividend yield, Janney Montgomery said.

Physicians Realty Trust (DOC) was initiated with a hold rating at TheStreet Ratings.

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International Rectifier (IRF) was upgraded at Goldman Sachs to neutral from sell. Twelve-month price target is $31. See fair value in the Infineon (IFNNY) bid, Goldman said.

Intermune (ITMN) was downgraded at Wells Fargo to market perform from outperform. Valuation call, as a potential takeover premium is largely baked into the stock, Wells Fargo said.

Madison Square Garden (MSG) was downgraded at Stifel Nicolaus to hold from buy. Company lacks near-term catalysts, Stifel Nicolaus said.

Telecom Argentina (TEO) was downgraded to hold at TheStreet Ratings.

Windstream (WIN) was downgraded at DA Davidson to neutral from buy. Valuation call, based on a 12-month price target of $11.75, DA Davidson said.

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

TheStreet Ratings team rates AMERN EAGLE OUTFITTERS INC as a Hold with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:

"We rate AMERN EAGLE OUTFITTERS INC (AEO) 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 good cash flow from operations and largely solid financial position with reasonable debt levels by most measures. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself, deteriorating net income and disappointing return on equity."

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

  • Net operating cash flow has significantly increased by 88.77% to -$4.34 million when compared to the same quarter last year. In addition, AMERN EAGLE OUTFITTERS INC has also vastly surpassed the industry average cash flow growth rate of -5.57%.
  • AEO 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. Although the company had a strong debt-to-equity ratio, its quick ratio of 1.00 is somewhat weak and could be cause for future problems.
  • AEO, with its decline in revenue, slightly underperformed the industry average of 0.3%. Since the same quarter one year prior, revenues slightly dropped by 4.9%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • 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. In comparison to the other companies in the Specialty Retail industry and the overall market, AMERN EAGLE OUTFITTERS INC's return on equity is significantly below that of the industry average and is below that of the S&P 500.
  • The gross profit margin for AMERN EAGLE OUTFITTERS INC is currently lower than what is desirable, coming in at 34.95%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of 0.59% trails that of the industry average.

TheStreet Ratings team rates INTL RECTIFIER CORP as a Buy with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation:

"We rate INTL RECTIFIER CORP (IRF) a BUY. This is driven by multiple 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, largely solid financial position with reasonable debt levels by most measures, compelling growth in net income, good cash flow from operations and expanding profit margins. We feel these strengths outweigh the fact that the company has had lackluster performance in the stock itself."

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

  • The revenue growth came in higher than the industry average of 9.0%. Since the same quarter one year prior, revenues rose by 20.1%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • IRF 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 3.47, which clearly demonstrates the ability to cover short-term cash needs.
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Semiconductors & Semiconductor Equipment industry. The net income increased by 190.1% when compared to the same quarter one year prior, rising from -$21.25 million to $19.14 million.
  • Net operating cash flow has significantly increased by 55.47% to $51.57 million when compared to the same quarter last year. In addition, INTL RECTIFIER CORP has also vastly surpassed the industry average cash flow growth rate of -9.88%.
  • 44.45% is the gross profit margin for INTL RECTIFIER CORP which we consider to be strong. It has increased significantly from the same period last year. Despite the strong results of the gross profit margin, IRF's net profit margin of 7.10% significantly trails the industry average.

This article was written by a staff member of TheStreet.

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