Story updated at 9:50 a.m. to reflect market activity.
Shares of Infinera gained 7.5% to $11.10 in morning trading.
The analyst firm raised its price target for the communication equipment company to $14 from $10.50. Jefferies lowered its EPS estimates for the company for 2014 to 25 cents a share from 26 cents a share, but raised its estimates for 2015 to 36 cents a share from 35 cents a share.
"We are raising our rating on Infinera shares from Hold to Buy as we believe the organization will have considerable success with their pending metro WDM product line," Jefferies analyst George Notter wrote. "Their metro WDM initiative, of course, will be announced next week at their Analyst meeting (September 18 in San Jose)."
Separately, TheStreet Ratings team rates INFINERA CORP as a Hold with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:
"We rate INFINERA CORP (INFN) 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 robust revenue growth, largely solid financial position with reasonable debt levels by most measures and impressive record of earnings per share growth. However, as a counter to these strengths, we also find weaknesses including weak operating cash flow and a generally disappointing 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 3.3%. Since the same quarter one year prior, revenues rose by 19.5%. Growth in the company's revenue appears to have helped boost the earnings per share.
- Although INFN's debt-to-equity ratio of 0.26 is very low, it is currently higher than that of the industry average. Along with this, the company maintains a quick ratio of 3.40, which clearly demonstrates the ability to cover short-term cash needs.
- 46.40% is the gross profit margin for INFINERA CORP which we consider to be strong. It has increased from the same quarter the previous year. Despite the strong results of the gross profit margin, INFN's net profit margin of 2.88% significantly trails the industry average.
- In its most recent trading session, INFN has closed at a price level that was not very different from its closing price of one year earlier. This is probably due to its weak earnings growth as well as other mixed factors. The fact that the stock is now selling for less than others in its industry in relation to its current earnings is not reason enough to justify a buy rating at this time.
- Net operating cash flow has decreased to $10.25 million or 42.80% 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.
- You can view the full analysis from the report here: INFN Ratings Report
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