TSC Ratings' Updates: Yahoo!

The following ratings changes were generated on Wednesday, Jan. 28

We've downgraded diversified chemical company Ashland(ASH Quote) from hold to sell, driven by its generally disappointing historical performance in the stock itself, feeble growth in its earnings per share, deteriorating net income, disappointing return on equity and weak operating cash flow.

Earnings per share fell 388.3% compared with the year-ago quarter. EPS have declined over the last year, and we anticipate that this should continue in the coming year. Net income fell from $33 million in the year-ago quarter to -$119 million, underperforming significantly the S&P 500 and the chemicals industry. Return on equity also fell, a clear sign of weakness within the company. Net operating cash flow is down 62.1% to $25 million.

Shares fell 78% over the year, underperforming the S&P 500, but this stock is still more expensive (when compared with its current earnings) than most other companies in its industry.

We've upgraded AstraZeneca(AZN Quote) from hold to buy, driven by its revenue growth, increase in net income, good cash flow from operations, growth in earnings per share and expanding profit margins. Although no company is perfect, currently we do not see any significant weaknesses which are likely to detract from the generally positive outlook.

Revenue increased by 7.6% since the year-ago quarter, compared with the industry average of 2.4% growth. Net income increased by 28.8% to $1,730 million, significantly outperforming the pharmaceuticals industry and the S&P 500. Net operating cash flow has increased to $1,659 million, or 24.92%, and earnings per share are up 32.2% in the most recent quarter compared with the same quarter a year ago. This company has reported somewhat volatile earnings recently, but we feel it is poised for EPS growth in the coming year.