How Will JDS Uniphase (JDSU) Stock React To This Analyst Action Today?

NEW YORK (TheStreet) -- JDS Uniphase Corp  (JDSU) had its price target increased to $17 from $15 at MKM Partners following the telecommunication company's presentation at Analyst Day, where it explained the rationale for splitting off into two companies.

Analysts at the firm increased its price target and kept its "buy" rating to reflect the $9 billion in NOL carryfowards and the multiple for the spin-off company because it is a potential acquisition target.

Yesterday, the company announced it it will break up the company to create a separate company from its optical components unit, and another from its network testing equipment unit.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

Shares of JDS Uniphase are down 0.19% to $13.35 in pre-market trading today.

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

"We rate JDS UNIPHASE CORP (JDSU) 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 revenue growth, expanding profit margins and largely solid financial position with reasonable debt levels by most measures. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, disappointing return on equity and a generally disappointing performance in the stock itself."

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

  • JDSU's revenue growth has slightly outpaced the industry average of 3.3%. Since the same quarter one year prior, revenues slightly increased by 6.5%. 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 JDS UNIPHASE CORP is rather high; currently it is at 53.30%. 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 -5.66% is in-line with the industry average.
  • Despite currently having a low debt-to-equity ratio of 0.45, it is higher than that of the industry average, inferring that management of debt levels may need to be evaluated further. Even though the debt-to-equity ratio shows mixed results, the company's quick ratio of 2.84 is very high and demonstrates very strong liquidity.
  • 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 Communications Equipment industry. The net income has significantly decreased by 127.5% when compared to the same quarter one year ago, falling from $92.50 million to -$25.40 million.
  • Current return on equity is lower than its ROE from the same quarter one year prior. This is a clear sign of weakness within the company. Compared to other companies in the Communications Equipment industry and the overall market, JDS UNIPHASE CORP's return on equity significantly trails that of both the industry average and the S&P 500.
  • You can view the full analysis from the report here: JDSU Ratings Report

EXCLUSIVE OFFER: See inside Jim Cramer's multi-million dollar charitable trust portfolio to see the stocks he and Stephanie Link think could be potentially HUGE winners. Click here to see the holdings for FREE

If you liked this article you might like

When Maids Quit to Trade Stocks

When Maids Quit to Trade Stocks

Market Rides a Chinese Seesaw

Market Rides a Chinese Seesaw

NetScout, Danaher Postpone Deal's Closing Date to Give Regulators More Time

NetScout, Danaher Postpone Deal's Closing Date to Give Regulators More Time

4 Big-Volume Stocks to Trade for Breakouts: Big Lots, Fresh Market and More

4 Big-Volume Stocks to Trade for Breakouts: Big Lots, Fresh Market and More

JDS Uniphase (JDSU) Stock Gains on Competitor's Quarterly Results and Strong Guidance

JDS Uniphase (JDSU) Stock Gains on Competitor's Quarterly Results and Strong Guidance