NEW YORK (TheStreet) -- Ironwood Pharmaceuticals
(IRWD - Get Report) shares are up 11.5% to $11.34 on Tuesday following the release of the company's first quarter 2014 earnings report.
The company posted quarterly revenue of $14.6 million, a $9.6 million increase from the previous quarter, beating analysts estimates of $8.5 million by 71%.
The biotech company posted net income loss of -38 cents per share, 4 cents better than analysts anticipated.
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TheStreet Ratings team rates IRONWOOD PHARMACEUTICALS INC as a Sell with a ratings score of D. TheStreet Ratings Team has this to say about their recommendation:
"We rate IRONWOOD PHARMACEUTICALS INC (IRWD) a SELL. This is driven by a number of negative factors, which we believe should have a greater impact than any strengths, and could make it more difficult for investors to achieve positive results compared to most of the stocks we cover. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income, disappointing return on equity, weak operating cash flow, generally high debt management risk and generally disappointing historical performance in the stock itself."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Biotechnology industry. The net income has decreased by 18.5% when compared to the same quarter one year ago, dropping from -$43.86 million to -$51.99 million.
- Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Biotechnology industry and the overall market, IRONWOOD PHARMACEUTICALS INC's return on equity significantly trails that of both the industry average and the S&P 500.
- Net operating cash flow has significantly decreased to -$42.08 million or 87.35% when compared to the same quarter last year. In addition, when comparing the cash generation rate to the industry average, the firm's growth is significantly lower.
- The debt-to-equity ratio is very high at 4.68 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. Despite the company's weak debt-to-equity ratio, the company has managed to keep a very strong quick ratio of 4.89, which shows the ability to cover short-term cash needs.
- Looking at the price performance of IRWD's shares over the past 12 months, there is not much good news to report: the stock is down 26.32%, and it has underformed the S&P 500 Index. In addition, the company's earnings per share are lower today than the year-earlier quarter. Naturally, the overall market trend is bound to be a significant factor. However, in one sense, the stock's sharp decline last year is 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.
- You can view the full analysis from the report here: IRWD Ratings Report