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NEW YORK (TheStreet) -- Tessera Technologies (TSRA) has been downgraded by TheStreet Ratings from Buy to Hold with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:
"We rate TESSERA TECHNOLOGIES INC (TSRA) 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 solid stock price performance, increase in net income and largely solid financial position with reasonable debt levels by most measures. However, as a counter to these strengths, we also find weaknesses including disappointing return on equity and poor profit margins."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- Powered by its strong earnings growth of 200.00% and other important driving factors, this stock has surged by 41.30% over the past year, outperforming the rise in the S&P 500 Index during the same period. Regarding the stock's future course, our hold rating indicates that we do not recommend additional investment in this stock despite its gains in the past year.
- 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 123.8% when compared to the same quarter one year prior, rising from -$15.81 million to $3.77 million.
- TESSERA TECHNOLOGIES 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, TESSERA TECHNOLOGIES INC reported poor results of -$2.27 versus -$0.21 in the prior year. This year, the market expects an improvement in earnings ($2.06 versus -$2.27).
- The gross profit margin for TESSERA TECHNOLOGIES INC is rather low; currently it is at 17.47%. Regardless of TSRA's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, TSRA's net profit margin of 10.13% is significantly lower than the industry average.
- 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. Compared to other companies in the Semiconductors & Semiconductor Equipment industry and the overall market, TESSERA TECHNOLOGIES INC'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: TSRA Ratings Report