TSC Ratings' Updates: Cephalon

Net operating cash flow has decreased to $59.07 million, or 27.68% when compared with the same quarter last year. In addition, when comparing the cash generation rate to the industry average, the firm's growth is significantly lower. Currently the debt-to-equity ratio of 1.61 is quite high overall and when compared to the industry average, suggesting that the current management of debt levels should be re-evaluated. Herbalife's quick ratio of 0.60 demonstrates the lack of ability of the company to cover short-term liquidity needs.

We've downgraded JDS Uniphase(JDSU), which provides communications test and measurement solutions, and optical products to telecommunications service providers, cable operators, and network equipment manufacturers, from hold to sell, driven by its deteriorating net income, disappointing return on equity and generally disappointing historical performance in the stock itself.

Net income has significantly decreased by 137.7% when compared to the same quarter one year ago, falling from -$6.90 million to -$16.40 million, significantly underperforming the S&P 500 and the communications equipment industry. Return on equity has slightly decreased from the same quarter one year prior, implying a minor weakness in the organization and underperforming both the industry average and the S&P 500.

Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year. It has tumbled by 60.43%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 166.66% compared with the year-earlier quarter. Naturally, the overall market trend is bound to be a significant factor, and the sharp decline last year could be considered a positive for future investors, making it cheaper (in proportion to its earnings over the past year) than most other stocks in its industry. But due to other concerns, we feel the stock is still not a good buy right now.