NEW YORK (TheStreet) -- Transcept Pharmaceuticals (Nasdaq:TSPT) has been upgraded by TheStreet Ratings from sell 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 compelling growth in net income. However, as a counter to these strengths, we find that the stock has experienced relatively poor performance when compared with the S&P 500 during the past year. Highlights from the ratings report include:
- TSPT's very impressive revenue growth greatly exceeded the industry average of 4.3%. Since the same quarter one year prior, revenues leaped by 310.2%. Growth in the company's revenue appears to have helped boost the earnings per share.
- TSPT 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 18.68, which clearly demonstrates the ability to cover short-term cash needs.
- TRANSCEPT PHARMACEUTICALS reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. However, we anticipate underperformance relative to this pattern in the coming year. During the past fiscal year, TRANSCEPT PHARMACEUTICALS continued to lose money by earning -$0.31 versus -$0.70 in the prior year. For the next year, the market is expecting a contraction of 245.2% in earnings (-$1.07 versus -$0.31).
- In its most recent trading session, TSPT has closed at a price level that was not very different from its closing price of one year earlier. This is probably due to its weak earnings growth as well as other mixed factors. Despite the fact that it has already risen in the past year, there is currently no conclusive evidence that warrants the purchase or sale of this stock.
- Current return on equity exceeded its ROE from the same quarter one year prior. This is a clear sign of strength within the company. Compared to other companies in the Pharmaceuticals industry and the overall market, TRANSCEPT PHARMACEUTICALS's return on equity significantly trails that of both the industry average and the S&P 500.
-- Written by a member of TheStreet RatingsStaff
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