Our EquityAnalytics department is always updating price targets and ratings on companies that we cover based on new information. Our price targets and ratings are thoroughly researched and use financial analysis tools to determine stock prices. Today we are updating the following companies from our coverage: BMC Software (BMC), Monster Beverage (MNST), MEMC Electronics (WFR), and Warnaco Group (WRC).
The chart below shows new ratings, price targets, and buy/sell ranges vs. old ones:
BMC Software: Maintain at Buy, Increase PT From $57 to $60
BMC Software continues to be one of our favorite application software companies due to its strong cloud computing service as well as value. Compared with most other growing cloud computing companies, BMC Software has a lot of value with 11 forward PE ratio and strong growth at 9%-10% right now. Cloud-related bookings rose 70% in the latest quarter, and that number will continue to stay elevated. The company's CEO is heavily bullish on growth, and the market is not pricing this company appropriately at all. This company is like Salesforce.com (CRM) and F5 Networks (FFIV), but it is priced like Microsoft (MSFT). Eventually, the market will get this one right.
Monster Beverage: Maintain at Hold, Decrease PT from $64 to $86
Monster Beverage continues to be a great high-growth stock with tons of potential. We do believe that the market is pricing in a lot of this growth, and we would be a buyer on a small dip. At the same time, we drastically improved our expectations for the company as growth continues to be very solid. The latest quarter improved past our expectations, and we had to up our expectations a lot. The recent addition of sales in Macau, Hong Kong, Ecuador, and other emerging markets is huge for the company, and despite a ton of economic moats, MNST continues to see great sales of energy drinks. The market, however, is pricing a 30 future PE it looks like to us, so we need to keep our expectations in check.
MEMC Electronics: Upgrade from Sell to Hold, Increase PT from $0 to $2
Well, it is looking like the company is not worth nothing anymore. The company is projecting income in 2013, and that is a new development that we were not expecting. The company, though, is still very weak. Heavy level of debts, no income currently, and a tough market that is not improving. Its not a recipe for success. Right now, unless the company has a drastic turnaround in 2013 it is priced pretty fairly. Stay away still, but if you are holding, it cannot get much worse.
Warnaco Group: Downgrade from Buy to Hold, Decrease PT from $72 to $57
We had to reduce our expectations on Warnaco. We thought the company would deal better with rising costs, but it has not. The company had a very terrible quarter, highlighted by weakness in Europe, the U.S., and Korea. It was not a good quarter, and things are not looking too great. At the same time, though, the stock has a 10 forward PE, and its a great value right now. We still would like to see a bit more downside before buying. The worst though may be over for this stock, and if the next quarter resumes the strength we were seeing in 2009-2010, WRC could have a solid turnaround.Disclosure: