NEW YORK (
) has been upgraded by TheStreet Ratings from hold to buy. The company's strengths can be seen in multiple areas, such as its revenue growth, expanding profit margins, solid stock price performance and notable return on equity. Although the company may harbor some minor weaknesses, we feel they are unlikely to have a significant impact on results.
Highlights from the ratings report include:
- The revenue growth came in higher than the industry average of 6.9%. Since the same quarter one year prior, revenues rose by 12.4%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
- The gross profit margin for GENOMIC HEALTH INC is currently very high, coming in at 85.80%. It has increased from the same quarter the previous year. Despite the strong results of the gross profit margin, GHDX's net profit margin of 6.20% significantly trails the industry average.
- Compared to its closing price of one year ago, GHDX's share price has jumped by 46.76%, exceeding the performance of the broader market during that same time frame. We feel that the stock's sharp appreciation over the last year has driven it to a price level which is now somewhat expensive compared to the rest of its industry. The other strengths this company shows, however, justify the higher price levels.
- GENOMIC HEALTH INC's earnings per share declined by 16.7% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, GENOMIC HEALTH INC turned its bottom line around by earning $0.14 versus -$0.33 in the prior year. This year, the market expects an improvement in earnings ($0.26 versus $0.14).
- The change in net income from the same quarter one year ago has significantly exceeded that of the Biotechnology industry average, but is less than that of the S&P 500. The net income has decreased by 12.1% when compared to the same quarter one year ago, dropping from $3.67 million to $3.23 million.
Genomic Health, Inc., a molecular diagnostics company, focuses on the development and global commercialization of genomic-based clinical laboratory services that analyze the underlying biology of cancer allowing physicians and patients to make individualized treatment decisions. The company has a P/E ratio of 116.7, equal to the average health services industry P/E ratio and above the S&P 500 P/E ratio of 17.7. Genomic Health has a market cap of $758.4 million and is part of the
industry. Shares are up 20% year to date as of the close of trading on Friday.
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