The firm downgraded EMC to "market perform" from "outperform" with a price target of $28.
FBR Capital analysts added that the company's fundamentals are weakening.
Hopkinton, Mass.-based EMC is a provider of enterprise storage solutions, including hardware, software and services.
The company operates in two businesses including EMC's information infrastructure business, and the VMware virtual infrastructure business.
Separately, TheStreet Ratings team rates EMC CORP/MA as a Hold with a ratings score of C+. TheStreet Ratings Team has this to say about their recommendation:
"We rate EMC CORP/MA (EMC) 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 revenue growth, largely solid financial position with reasonable debt levels by most measures and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, weak operating cash flow and relatively poor performance when compared with the S&P 500 during the past year."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The revenue growth significantly trails the industry average of 33.3%. Since the same quarter one year prior, revenues slightly increased by 2.4%. 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.
- Although EMC's debt-to-equity ratio of 0.27 is very low, it is currently higher than that of the industry average. Although the company had a strong debt-to-equity ratio, its quick ratio of 0.90 is somewhat weak and could be cause for future problems.
- The gross profit margin for EMC CORP/MA is rather high; currently it is at 67.22%. Regardless of EMC's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, EMC's net profit margin of 4.48% is significantly lower than the industry average.
- Net operating cash flow has decreased to $1,080.00 million or 19.28% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
- 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 Computers & Peripherals industry. The net income has significantly decreased by 35.7% when compared to the same quarter one year ago, falling from $392.00 million to $252.00 million.
- You can view the full analysis from the report here: EMC Ratings Report