3 Stocks Reiterated As A Hold: PCYC, LNKD, PM

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer.

NEW YORK (TheStreet) -- TheStreet Ratings team reiterated 3 stocks with a hold rating on Thursday based on 32 different data factors including general market action, fundamental analysis and technical indicators. The in-depth analysis of these ratings decisions goes as follows:

Pharmacyclics Inc:

Pharmacyclics (Nasdaq: PCYC) has been reiterated by TheStreet Ratings as a hold with a ratings score of C+. According to TheStreet Ratings team: The company's strengths can be seen in multiple areas, such as its robust revenue growth, largely solid financial position with reasonable debt levels by most measures and good cash flow from operations. However, as a counter to these strengths, we also find weaknesses including unimpressive growth in net income, disappointing return on equity and poor profit margins.

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Highlights from the ratings report include:
  • PCYC's very impressive revenue growth greatly exceeded the industry average of 34.7%. Since the same quarter one year prior, revenues leaped by 134.9%. 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.
  • PCYC has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign. Along with this, the company maintains a quick ratio of 4.88, which clearly demonstrates the ability to cover short-term cash needs.
  • Compared to its closing price of one year ago, PCYC's share price has jumped by 110.47%, exceeding the performance of the broader market during that same time frame. Setting our sights on the months ahead, however, we feel that the stock's sharp appreciation over the last year has driven it to a price level which is now relatively expensive compared to the rest of its industry. The implication is that its reduced upside potential is not good enough to warrant further investment at this time.
  • The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. When compared to other companies in the Biotechnology industry and the overall market, PHARMACYCLICS INC's return on equity is below that of both the industry average and the S&P 500.
  • The gross profit margin for PHARMACYCLICS INC is currently lower than what is desirable, coming in at 32.46%. It has decreased significantly from the same period last year. Along with this, the net profit margin of 21.87% significantly trails the industry average.

Pharmacyclics, Inc., a biopharmaceutical company, focuses on developing and commercializing novel therapies for the treatment of cancer and immune-mediated diseases in the United States. Pharmacyclics has a market cap of $19.6 billion and is part of the health care sector and drugs industry. Shares are up 109.9% year-to-date as of the close of trading on Wednesday.

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LinkedIn Corp:

LinkedIn (NYSE: LNKD) has been reiterated by TheStreet Ratings as a hold with a ratings score of C. According to TheStreet Ratings team: The company's strengths can be seen in multiple areas, such as its robust revenue growth, solid stock price performance and good cash flow from operations. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, disappointing return on equity and feeble growth in the company's earnings per share.

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Highlights from the ratings report include:
  • The revenue growth came in higher than the industry average of 18.6%. Since the same quarter one year prior, revenues rose by 43.9%. 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.
  • Compared to its closing price of one year ago, LNKD's share price has jumped by 29.03%, exceeding the performance of the broader market during that same time frame. Although LNKD had significant growth over the past year, our hold rating indicates that we do not recommend additional investment in this stock at the current time.
  • Despite currently having a low debt-to-equity ratio of 0.33, 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 4.41 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 Internet Software & Services industry. The net income has decreased by 20.8% when compared to the same quarter one year ago, dropping from $3.78 million to $3.00 million.
  • The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. Compared to other companies in the Internet Software & Services industry and the overall market, LINKEDIN CORP's return on equity significantly trails that of both the industry average and the S&P 500.

LinkedIn Corporation, together with its subsidiaries, operates an online professional network worldwide. LinkedIn has a market cap of $28.9 billion and is part of the technology sector and internet industry. Shares are up 11.5% year-to-date as of the close of trading on Wednesday.

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Philip Morris International Inc:

Philip Morris International (NYSE: PM) has been reiterated by TheStreet Ratings as a hold with a ratings score of C. According to TheStreet Ratings team: Among the primary strengths of the company is its expanding profit margins over time. At the same time, however, we also find weaknesses including feeble growth in the company's earnings per share, weak operating cash flow and a generally disappointing performance in the stock itself.

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Highlights from the ratings report include:
  • Despite the weak revenue results, PM has outperformed against the industry average of 23.1%. Since the same quarter one year prior, revenues slightly dropped by 7.6%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • The gross profit margin for PHILIP MORRIS INTERNATIONAL is rather high; currently it is at 66.25%. Regardless of PM's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, PM's net profit margin of 22.39% compares favorably to the industry average.
  • In its most recent trading session, PM has closed at a price level that was not very different from its closing price of one year earlier. This is probably due to its weak earnings growth as well as other mixed factors. Turning toward the future, the fact that the stock has come down in price over the past year should not necessarily be interpreted as a negative; it could be one of the factors that may help make the stock attractive down the road. Right now, however, we believe that it is too soon to buy.
  • PHILIP MORRIS INTERNATIONAL's earnings per share declined by 16.9% in the most recent quarter compared to the same quarter a year ago. Earnings per share have declined over the last two years. We anticipate that this should continue in the coming year. During the past fiscal year, PHILIP MORRIS INTERNATIONAL reported lower earnings of $4.76 versus $5.26 in the prior year. For the next year, the market is expecting a contraction of 10.3% in earnings ($4.27 versus $4.76).
  • Net operating cash flow has decreased to $1,354.00 million or 41.63% 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.

Philip Morris International Inc., through its subsidiaries, manufactures and sells cigarettes, other tobacco products, and other nicotine-containing products. Philip Morris International has a market cap of $119.9 billion and is part of the consumer goods sector and tobacco industry. Shares are down 5.8% year-to-date as of the close of trading on Wednesday.

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