Will CA (CA) Stock React Today to This Analyst Action?

NEW YORK (TheStreet) -- Jefferies initiated coverage of CA, Inc.  (CA) with a "buy" rating and a price target of $40.

The New York-based enterprise information technology management software and solutions company can adapt and thrive, analysts said.

"We believe CA provides relative cash flow sustainability in uncertain times, as well as an opportunity for growth as the company's renewed strategy and focus on development takes hold. The recurring nature of highly profitable maintenance revenue, particularly from mainframe software, also enables CA to continue returning capital to shareholders while simultaneously investing in the business," analysts added.

Shares of CA closed up 0.27% at $30.10 yesterday.

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

"We rate CA INC (CA) a BUY. This is driven by some important positives, 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 increase in net income, attractive valuation levels, expanding profit margins, growth in earnings per share and largely solid financial position with reasonable debt levels by most measures. We feel these strengths outweigh the fact that the company has had somewhat disappointing return on equity."

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

  • The net income growth from the same quarter one year ago has exceeded that of the S&P 500 and the Software industry average. The net income increased by 6.7% when compared to the same quarter one year prior, going from $240.00 million to $256.00 million.
  • The gross profit margin for CA INC is currently very high, coming in at 85.26%. Regardless of CA's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, CA's net profit margin of 23.72% compares favorably to the industry average.
  • CA INC's earnings per share improvement from the most recent quarter was slightly positive. 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, CA INC reported lower earnings of $1.96 versus $2.07 in the prior year. This year, the market expects an improvement in earnings ($2.44 versus $1.96).
  • The revenue fell significantly faster than the industry average of 28.1%. Since the same quarter one year prior, revenues slightly dropped by 2.4%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.

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