Hurwitz's current employment agreement with DDR expires on Dec. 31, 2015. The CEO is expected to stay through the end of his agreement to help transition to new leadership.
Following the announcement to not renew Hurwitz's contract UBS (UBS) downgraded the stock to "neutral" from "buy." The analyst firm also lowered its price target for the company to $18 from $19.
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"We think it's tough to see the shares making material advances until the market gets clarity on the future leadership and direction at DDR (a la EQY following Jeff Olson's departure)," UBS analyst Jeremy Metz wrote. "Therefore, we think investors will take a wait and see approach, leaving the shares range bound in the interim."
Separately, TheStreet Ratings team rates DDR CORP as a Hold with a ratings score of C+. TheStreet Ratings Team has this to say about their recommendation:
"We rate DDR CORP (DDR) 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, compelling growth in net income and increase in stock price during the past year. However, as a counter to these strengths, we also find weaknesses including weak operating cash flow, poor profit margins and feeble growth in the company's earnings per share."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The revenue growth came in higher than the industry average of 10.6%. Since the same quarter one year prior, revenues rose by 21.5%. Growth in the company's revenue appears to have helped boost the earnings per share.
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Real Estate Investment Trusts (REITs) industry. The net income increased by 426.1% when compared to the same quarter one year prior, rising from -$23.31 million to $76.02 million.
- Compared to where it was a year ago today, the stock is now trading at a higher level, reflecting both the market's overall trend during that period and the fact that the company's earnings growth has been robust. We feel that the combination of its price rise over the last year and its current price-to-earnings ratio relative to its industry tend to reduce its upside potential.
- The gross profit margin for DDR CORP is rather low; currently it is at 20.17%. It has decreased from the same quarter the previous year. Regardless of the weak results of the gross profit margin, the net profit margin of 29.46% is above that of the industry average.
- Net operating cash flow has declined marginally to $109.16 million or 0.96% 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: DDR Ratings Report
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