NEW YORK (TheStreet) -- Shares of Cardiovascular Systems(CSII) - Get Report are down 19.42% to $13.40 in afternoon trading on Thursday after the company released preliminary first quarter earnings results today.

The medical technology company said that they expected to report first quarter revenue of $43.9 million which would represent an 11% increase from the same period last year.

However, that number is below the $48.5 million to $50 million the company had forecast for the period in the previous quarter.

"We continued to make progress on our sales optimization strategy to significantly expand our sales organization, while cross training representatives to sell both peripheral and coronary applications," said CEO David Martin. 

"However, as our recent results suggest, some aspects of the transition have been challenging. After a thorough review, we believe we have taken the right steps to address the immediate challenges and continue to expect the vast majority of the optimization effort to be completed by the third quarter of this fiscal year," said Martin.

TheStreet Ratings team rates CARDIOVASCULAR SYSTEMS INC as a Sell with a ratings score of D. TheStreet Ratings Team has this to say about their recommendation:

We rate CARDIOVASCULAR SYSTEMS INC (CSII) a SELL. This is driven by some concerns, 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 disappointing return on equity and generally disappointing historical performance in the stock itself.

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. Compared to other companies in the Health Care Equipment & Supplies industry and the overall market, CARDIOVASCULAR SYSTEMS INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • CSII's stock share price has done very poorly compared to where it was a year ago: Despite any rallies, the net result is that it is down by 33.61%, which is also worse that the performance of the S&P 500 Index. Investors have so far failed to pay much attention to the earnings improvements the company has managed to achieve over the last 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.
  • CARDIOVASCULAR SYSTEMS INC has improved earnings per share by 12.9% 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, CARDIOVASCULAR SYSTEMS INC continued to lose money by earning -$1.04 versus -$1.24 in the prior year. For the next year, the market is expecting a contraction of 1.0% in earnings (-$1.05 versus -$1.04).
  • Net operating cash flow has increased to -$7.27 million or 14.86% when compared to the same quarter last year. Despite an increase in cash flow, CARDIOVASCULAR SYSTEMS INC's cash flow growth rate is still lower than the industry average growth rate of 27.56%.
  • The gross profit margin for CARDIOVASCULAR SYSTEMS INC is currently very high, coming in at 73.75%. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of -17.89% is in-line with the industry average.
  • You can view the full analysis from the report here: CSII