Each weekday, TheStreet.com Ratings updates its ratings on the stocks it covers. The proprietary ratings model projects a stock's total return potential over a 12-month period, including both price appreciation and dividends. Buy, hold or sell ratings designate how the Ratings group expects these stocks to perform against a general benchmark of the equities market and interest rates.
While the ratings model is quantitative, it uses both subjective and objective elements. For instance, subjective elements include expected equities market returns, future interest rates, implied industry outlook and company earnings forecasts. Objective elements include volatility of past operating revenue, financial strength and company cash flows.
( BVF) engages in the clinical testing, registration, manufacture and commercialization of pharmaceutical products using various drug-delivery technologies. It has been downgraded to a hold from a buy. The company has some strengths and some weaknesses. It has no debt to speak of, profit margins are expanding and it has a quick ratio of 2.10, demonstrating its ability to cover short-term liquidity needs.
As a counter to these strengths, Biovail EPS growth has been feeble, its return on equity has been disappointing and its net income fell 20.5% in the second quarter compared to the same period last year. The stock's price has increased by 13.81% in the past 12 months, despite the company's weak earnings. There is currently no conclusive evidence that warrants the purchase or sale of this stock. Biovail had been rated a buy since December 2006.
Serving over one million residential, industrial, portable tank exchange, agricultural and other customers in all 50 states,
has been downgraded to a hold from a buy.
The company's strengths include revenue growth of 18.6% in the third quarter of 2007 compared with the same period last year, which outpaced the industry average. It also improved EPS by 29.4% in the same timeframe, continuing a two-year pattern of earnings growth.
However, the company's debt-to-equity ratio of 3.39 is higher than the industry average, implying very poor management of debt levels. Ferrellgas' stock has declined by 1.85% in the last year, and TheStreet.com Ratings does not see anything in the company's numbers to suggest this trend will change. Ferrellgas had been rated a buy since May 2007.
Open source software solutions company
has been downgraded to a hold from a buy. The company's revenue growth of 41.5% in the first quarter of its fiscal 2008 compared with the same period last year exceeded the industry average of 19.8%. Net income increased by 17.9% over the same timeframe, growing to $16.22 million from $13.75 million.
Red Hat also shows expanding profit margins. As a counter to these strengths, its stock price has not performed well, declining 14.42% in the past 12 months. It also shows declining return on equity and weak operating cash flow. Red Hat had been rated a buy since February 2007.
engages in the exploration and production of oil and gas properties in Papua New Guinea. It has been upgraded to a hold from a sell. The company's earnings loss narrowed in the second quarter to 11 cents per share from 60 cents per share a year earlier. InterOil's stock has increased by 119.10% over the past 12 months.
The company's gross profit margin of 8.40% is extremely low, with a debt-to-equity ratio of 2.12 that is higher than the industry average. This implies poor management of debt levels. InterOil had been rated a sell since TheStreet.com Ratings initiated its coverage in October 2005.
Additional ratings changes are listed below.