Par Pharmaceutical Companies Inc. Stock Upgraded (PRX)

NEW YORK (TheStreet) -- Par Pharmaceutical Companies (NYSE:PRX) has been upgraded by TheStreet Ratings from hold to buy. The company's strengths can be seen in multiple areas, such as its largely solid financial position with reasonable debt levels by most measures and expanding profit margins. We feel these strengths outweigh the fact that the company has had sub par growth in net income.

Highlights from the ratings report include:

• PRX 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. To add to this, PRX has a quick ratio of 2.21, which demonstrates the ability of the company to cover short-term liquidity needs.
• PAR PHARMACEUTICAL COS INC's earnings per share declined by 30.2% in the most recent quarter compared to 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. During the past fiscal year, PAR PHARMACEUTICAL COS INC increased its bottom line by earning $2.60 versus $2.27 in the prior year. This year, the market expects an improvement in earnings ($3.28 versus $2.60).
• 42.10% is the gross profit margin for PAR PHARMACEUTICAL COS INC which we consider to be strong. Regardless of PRX's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 10.20% trails the industry average.
• PRX, with its decline in revenue, underperformed when compared the industry average of 6.5%. Since the same quarter one year prior, revenues slightly dropped by 8.1%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
• After a year of stock price fluctuations, the net result is that PRX's price has not changed very much. Although its weak earnings growth may have played a role in this flat result, don't lose sight of the fact that the performance of the overall market, as measured by the S&P 500 Index, was essentially similar. Looking ahead, although the push and pull of the overall market trend could certainly make a critical difference, we do not see any strong reason stemming from the company's fundamentals that would cause a continuation of last year's decline. In fact, the stock is now selling for less than others in its industry in relation to its current earnings.

Par Pharmaceutical Companies, Inc., through its subsidiary, Par Pharmaceutical, Inc. engages in developing, licensing, manufacturing, marketing, and distributing generic and branded drugs in the United States. Par Pharmaceutical Companies has a market cap of $1.24 billion and is part of the health care sector and drugs industry. Shares are up 8.9% year to date as of the close of trading on Thursday.

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