NEW YORK (TheStreet) -- StemCells (STEM - Get Report) shares shot up 12% to $2.24 on Wednesday after analysts at Brinson Partick assumed coverage on the company's stock with an "outperform" rating and a $7 price target on the company's shares.
The stem cell therapy research company recently reported positive data from the first human neural stem cell transplantation in chronic spinal cord injury (SCI) and geographic atrophy age-related macular degeneration (GA-AMD) with its highly purified human neural HuCNS-SC stem cells.
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TheStreet Ratings team rates STEMCELLS INC as a Sell with a ratings score of D-. TheStreet Ratings Team has this to say about their recommendation:
"We rate STEMCELLS INC (STEM) 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 and generally high debt management risk."
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 18.8% when compared to the same quarter one year ago, dropping from -$6.42 million to -$7.62 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, STEMCELLS INC's return on equity significantly trails that of both the industry average and the S&P 500.
- The debt-to-equity ratio is very high at 2.08 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 3.19, which shows the ability to cover short-term cash needs.
- STEMCELLS INC has improved earnings per share by 17.6% 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, STEMCELLS INC continued to lose money by earning -$0.62 versus -$1.03 in the prior year. For the next year, the market is expecting a contraction of 1.6% in earnings (-$0.63 versus -$0.62).
- Net operating cash flow has slightly increased to -$6.51 million or 2.16% when compared to the same quarter last year. Despite an increase in cash flow, STEMCELLS INC's cash flow growth rate is still lower than the industry average growth rate of 14.84%.
- You can view the full analysis from the report here: STEM Ratings Report