TSC Ratings' Updates: Cephalon

The following ratings changes were generated on Thursday, Oct. 30.

We've upgraded biopharmaceutical company Cephalon(CEPH Quote) from hold to buy, driven by its compelling growth in net income, revenue growth, notable return on equity, reasonable valuation levels and good cash flow from operations. We feel these strengths outweigh the fact that the company shows low profit margins.

Net income rose 136.5% when compared with the same quarter a year ago, from -$306.76 million to $112.04 million, outperforming the S&P 500 and the biotechnology industry. Revenue rose by 13.7%, boosting earnings per share but underperforming the industry average of 17.3%. Return on equity greatly increased over the same quarter last year, a signal of significant strength within the corporation, outperforming the industry and the overall market. Net operating cash flow increased to $162.13 million, or 31.27% when compared with the same quarter last year, vastly surpassing the industry average cash flow growth rate of -96.59%. ...