NEW YORK (TheStreet) --Shares of Teradata Corp. (TDC) are lower by 3.32% to $37.29 in early afternoon trading, after receiving a rating downgrade to "underperform" from "market perform" at JMP Securities on Monday morning.
The firm said it reduced its rating on the computer company that sells analytic data platforms, applications, and related services, as it believes Teradata's current valuation underestimates the difficulties the company is facing, due to the increase in alternative data platforms.
JMP has a $30 price target on the company's stock.
"We believe the demand for those platforms is accelerating at the expense of Teradata and as the platforms become more pervasive throughout the enterprise, it may, in turn, lead to increased pricing pressure on Teradata (leading to lower revenue), some wholesale replacements of Teradata (evidence of which we saw at the Hadoop Summit), and the impact of Teradata's mix-shift moving forward (negatively impacting margins)," JMP Securities said in an analyst note.
Separately, TheStreet Ratings team rates TERADATA CORP as a Hold with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:
"We rate TERADATA CORP (TDC) 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 largely solid financial position with reasonable debt levels by most measures, reasonable valuation levels and notable return on equity. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, weak operating cash flow and a generally disappointing performance in the stock itself."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The current debt-to-equity ratio, 0.42, is low and is below the industry average, implying that there has been successful management of debt levels. To add to this, TDC has a quick ratio of 1.72, which demonstrates the ability of the company to cover short-term liquidity needs.
- The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the IT Services industry and the overall market on the basis of return on equity, TERADATA CORP has underperformed in comparison with the industry average, but has exceeded that of the S&P 500.
- 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 IT Services industry. The net income has significantly decreased by 62.7% when compared to the same quarter one year ago, falling from $59.00 million to $22.00 million.
- Net operating cash flow has decreased to $222.00 million or 35.27% 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.
- You can view the full analysis from the report here: TDC Ratings Report