NEW YORK (TheStreet) -- SuperGen (Nasdaq:SUPG) has been downgraded by TheStreet Ratings from buy to hold. The company's strengths can be seen in multiple areas, such as its robust revenue growth, largely solid financial position with reasonable debt levels by most measures and reasonable valuation levels. However, as a counter to these strengths, we also find weaknesses including poor profit margins, unimpressive growth in net income and feeble growth in the company's earnings per share. Highlights from the ratings report include:
- The revenue growth came in higher than the industry average of 7.2%. Since the same quarter one year prior, revenues rose by 17.9%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
- SUPG has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign. Along with this, the company maintains a quick ratio of 20.70, which clearly demonstrates the ability to cover short-term cash needs.
- Current return on equity exceeded its ROE from the same quarter one year prior. This is a clear sign of strength within the company. When compared to other companies in the Biotechnology industry and the overall market, SUPERGEN INC's return on equity has significantly outperformed in comparison with the industry average, but has underperformed when compared to that of the S&P 500.
- The change in net income from the same quarter one year ago has exceeded that of the Biotechnology industry average, but is less than that of the S&P 500. The net income has decreased by 6.0% when compared to the same quarter one year ago, dropping from $0.96 million to $0.90 million.
- The gross profit margin for SUPERGEN INC is currently extremely low, coming in at 12.40%. Regardless of SUPG's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, SUPG's net profit margin of 7.70% is significantly lower than the same period one year prior.
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