How Will Equinix (EQIX) Stock Respond To This Analyst Downgrade?

NEW YORK (TheStreet) -- Equinix Inc  (EQIX) was downgraded to "market perform" from "outperform" by analysts at Wells Fargo this morning.

The firm cited the business solutions company's limited upside potential to 2015 consensus estimates and believes that much benefit of the REIT conversion has been factored into shares. 

Wells Fargo lowered its price target range for shares to $229-$244 from its previous $241-$256.

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Equinix stock closed at $214.24 yesterday.

Separately, TheStreet Ratings team rates EQUINIX INC as a Buy with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation:

"We rate EQUINIX INC (EQIX) a BUY. This is driven by a number of 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 compelling growth in net income, revenue growth, expanding profit margins, solid stock price performance and impressive record of earnings per share growth. We feel these strengths outweigh the fact that the company shows weak operating cash flow."

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

  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Internet Software & Services industry. The net income increased by 143.9% when compared to the same quarter one year prior, rising from -$25.82 million to $11.33 million.
  • EQIX's revenue growth trails the industry average of 43.9%. Since the same quarter one year prior, revenues rose by 14.4%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • The gross profit margin for EQUINIX INC is currently very high, coming in at 70.72%. It has increased from the same quarter the previous year. Despite the strong results of the gross profit margin, EQIX's net profit margin of 1.87% significantly trails the industry average.
  • Looking at where the stock is today compared to one year ago, we find that it is not only higher, but it has also clearly outperformed the rise in the S&P 500 over the same period. Although other factors naturally played a role, the company's strong earnings growth was key. Looking ahead, the stock's rise over the last year has already helped drive it to a level which is relatively expensive compared to the rest of its industry. We feel, however, that the other strengths this company displays justify these higher price levels.
  • EQUINIX INC reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, EQUINIX INC reported lower earnings of $1.84 versus $2.57 in the prior year. This year, the market expects an improvement in earnings ($2.94 versus $1.84).
  • You can view the full analysis from the report here: EQIX Ratings Report

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