Speculating on companies whose
ratings have been recently changed by analysts can be a good short-term
strategy. Normally, companies will see increases in their prices after
these changes. The ratings are updated daily and can therefore change
daily. They can change because of a change in the analyst's estimate of
the stock's fair value, a change in the analyst's assessment of a
company's business risk, or a combination of any of these factors.
I assessed companies which were upgraded on October 5, and I chose the two companies with a change in ratings to consider.
The companies with significant changes are:
These two stocks are valued for the change from sell, hold, market perform or neutral to buy or strong buy. It is considered a very significant change because ratings had remained static for a long time. This change has to strongly favor the valuation of the companies mentioned above as well as the vision of future investors. Normally, these changes for the better are due to lower debt and improvement of the companies' cash. These are two keys to perform a follow-up or think in any purchase of these stocks.
Here is a look at the two stocks:
Informatica Corporation
Informatica Corporation provides enterprise data integration and data quality software and services worldwide. The company offers PowerCenter, which integrates data virtually from business systems in various formats and delivers that data throughout the enterprise; PowerExchange that enables information technology organizations to access the sources of enterprise data without having to develop custom data access programs and Data Services for finding, integrating and managing data in the enterprise.
Informatica Corporation has a market cap of $2.94 Billion and an enterprise value of $2.26 Billion. Its trailing P/E is 26.53, and its forward P/E is just 16.43. Informatica's estimated growth rate for this year is 27.17%. It has a total cash position on its balance sheet of just $565.28 Million, and its total debt is at 0. So, its total debt/equity is just 0.
New Rating
Nomura Securities upgraded Informatica from Neutral to Buy but cut its price target from $38 to $33
Analyst at Nomura Securities, Rick Sherlund, said:
Informatica Corporation's revenue / EPS estimates for 2012 and 2013 are now $798 / $1.28 and $865 / $1.40 versus estimates prior to the pre-announcement of $827 / $1.45 and $930 / $1.63, respectively. Nomura analysts expect improved earnings in the medium term. They base their opinion on the sales growth on the consolidation of new licenses. Although Nomura has cut its target price of Informatica Corporation, I do not find logical foundations to support its position because Informatica has cut its estimates of annual sales at 3% for 2012 and 2013. The most important risk on this stock is that the company's quarter revenues do not have the market's expected increase.
(click to enlarge)
From a technical standpoint, this stock is currently trading below both its 50-day and 200-day moving averages, which is bearish. This stock plunged from its April high of $54.49 to a recent low in October of $23.83. If you are bullish on this stock, I would look to be a buyer on the next high-volume move above some near-term overhead resistance at $27.74 a share. Look for volume that's tracking in close to or above its three-month average action of 3,013,479 shares.
The Pep Boys—Manny, Moe & Jack
The Pep Boys—Manny, Moe & Jack together with its subsidiaries, provides automotive repair and maintenance services, tires, parts, and accessories. Its product lines consist of tires; batteries; new and remanufactured parts for vehicles; chemicals and maintenance items; fashion, electronic, and performance accessories; and non-automotive merchandise, such as generators, power tools, and personal transportation products.
The company has a market cap of $544.21 Million and an enterprise value of $697.67M Million. This stock trades at a cheap valuation. Its trailing P/E is 14.88, and its forward P/E is just 16.30. The Pep BoysManny's estimated growth rate for this year is 36.96%. It has a total cash position on its balance sheet of just $150.83 Million, and its total debt is at $304.25 Million. So, its total debt/equity is just 55.99.
New Rating
Benchmark upgraded Pep Boys - Manny, Moe & Jack from Hold to Buy with a price target of $12.00 (from $10.00).
Analyst at Benchmark, Ronald Bookbinder, said:
Benchmark expects a growth in sales of tires in the Q4. The financial position of the company is going through hard times due to the high debt. If the company achieves a refinancing of debt, stock's prices could be higher, but the most important risk is that the company's quarter revenues do not have the market's expected increase. In my opinion, the risk/return is not attractive. I would expect a growth on sales in the next financial report.
(click to enlarge)
From a technical standpoint, this stock is currently trading above both its 50-day and 200-day moving averages, which is bullish. This stock plunged from its February high of $15.46 to a recent low in June of $8.31. After hitting that low, the stock bounced to its current price of $10.27. If you are bullish on this stock, I would look to be a buyer on the next high-volume move above some near-term overhead resistance at $10.45 a share. Look for volume that's tracking in close to or above its three-month average action of 595,255shares.
*Chart data sourced from finviz.com, all other data sourced from yahoo.com.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.
The companies with significant changes are:
- Informatica Corporation (INFA) changed rating from neutral to buy.
- The Pep Boys—Manny, Moe & Jack (PBY) changed rating from hold to buy.
These two stocks are valued for the change from sell, hold, market perform or neutral to buy or strong buy. It is considered a very significant change because ratings had remained static for a long time. This change has to strongly favor the valuation of the companies mentioned above as well as the vision of future investors. Normally, these changes for the better are due to lower debt and improvement of the companies' cash. These are two keys to perform a follow-up or think in any purchase of these stocks.
Here is a look at the two stocks:
Informatica Corporation
Informatica Corporation provides enterprise data integration and data quality software and services worldwide. The company offers PowerCenter, which integrates data virtually from business systems in various formats and delivers that data throughout the enterprise; PowerExchange that enables information technology organizations to access the sources of enterprise data without having to develop custom data access programs and Data Services for finding, integrating and managing data in the enterprise.
Informatica Corporation has a market cap of $2.94 Billion and an enterprise value of $2.26 Billion. Its trailing P/E is 26.53, and its forward P/E is just 16.43. Informatica's estimated growth rate for this year is 27.17%. It has a total cash position on its balance sheet of just $565.28 Million, and its total debt is at 0. So, its total debt/equity is just 0.
New Rating
Nomura Securities upgraded Informatica from Neutral to Buy but cut its price target from $38 to $33
Analyst at Nomura Securities, Rick Sherlund, said:
My Rating and Technical Analysis"This will likely take several quarters to get through, although we like the current risk / reward in the stock. New sales management is in transition and the recovery in license revenues will likely take several quarters."
Informatica Corporation's revenue / EPS estimates for 2012 and 2013 are now $798 / $1.28 and $865 / $1.40 versus estimates prior to the pre-announcement of $827 / $1.45 and $930 / $1.63, respectively. Nomura analysts expect improved earnings in the medium term. They base their opinion on the sales growth on the consolidation of new licenses. Although Nomura has cut its target price of Informatica Corporation, I do not find logical foundations to support its position because Informatica has cut its estimates of annual sales at 3% for 2012 and 2013. The most important risk on this stock is that the company's quarter revenues do not have the market's expected increase.
(click to enlarge)
From a technical standpoint, this stock is currently trading below both its 50-day and 200-day moving averages, which is bearish. This stock plunged from its April high of $54.49 to a recent low in October of $23.83. If you are bullish on this stock, I would look to be a buyer on the next high-volume move above some near-term overhead resistance at $27.74 a share. Look for volume that's tracking in close to or above its three-month average action of 3,013,479 shares.
The Pep Boys—Manny, Moe & Jack
The Pep Boys—Manny, Moe & Jack together with its subsidiaries, provides automotive repair and maintenance services, tires, parts, and accessories. Its product lines consist of tires; batteries; new and remanufactured parts for vehicles; chemicals and maintenance items; fashion, electronic, and performance accessories; and non-automotive merchandise, such as generators, power tools, and personal transportation products.
The company has a market cap of $544.21 Million and an enterprise value of $697.67M Million. This stock trades at a cheap valuation. Its trailing P/E is 14.88, and its forward P/E is just 16.30. The Pep BoysManny's estimated growth rate for this year is 36.96%. It has a total cash position on its balance sheet of just $150.83 Million, and its total debt is at $304.25 Million. So, its total debt/equity is just 55.99.
New Rating
Benchmark upgraded Pep Boys - Manny, Moe & Jack from Hold to Buy with a price target of $12.00 (from $10.00).
Analyst at Benchmark, Ronald Bookbinder, said:
My Rating and Technical Analysis"We believe an improving tire profit environment and a possible debt refinance could provide catalysts for earnings improvement, despite weakness on discretionary items. We believe the tire profit margin environment has started to show improvement with further improvement coming in Q4. The balance sheet is strong, as the Company builds cash to pay down and refinance debt."
Benchmark expects a growth in sales of tires in the Q4. The financial position of the company is going through hard times due to the high debt. If the company achieves a refinancing of debt, stock's prices could be higher, but the most important risk is that the company's quarter revenues do not have the market's expected increase. In my opinion, the risk/return is not attractive. I would expect a growth on sales in the next financial report.
(click to enlarge)
From a technical standpoint, this stock is currently trading above both its 50-day and 200-day moving averages, which is bullish. This stock plunged from its February high of $15.46 to a recent low in June of $8.31. After hitting that low, the stock bounced to its current price of $10.27. If you are bullish on this stock, I would look to be a buyer on the next high-volume move above some near-term overhead resistance at $10.45 a share. Look for volume that's tracking in close to or above its three-month average action of 595,255shares.
*Chart data sourced from finviz.com, all other data sourced from yahoo.com.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.
1 comentarios:
In my view, a fundamental change in the ratings could occur in the next couple of days. It depends on many factors and has many risks.
Post a Comment