NEW YORK (TheStreet) -- Shares of Immunomedics Inc (IMMU) - Get Report were tanking, sharply down 19.61% to $2.05 in afternoon trading Wednesday, after analysts at Jefferies downgraded the stock, citing its disappointing results of epratuzumab trials.
Analysts at the firm lowered their rating to "hold" from "buy" with a price target cut to $2 from $6, noting that the epratuzumab failed in phase three for chronic inflammatory disease lupus.
Jefferies believes partner UCB (UCBJY) will likely stop the program following the negative outcome.
Yesterday, law firm Levi & Korsinsky announced its investigation into the board of Immunomedics for possible violations of federal securities laws.
About 8.37 million shares have changed hands as of 1:20 p.m. ET today, compared to its average trading volume of about 1.61 million shares a day.
Morris Plains, NJ-based Immunomedics is a clinical-stage biopharmaceutical company developing monoclonal antibody-based products for the targeted treatment of cancer, autoimmune disorders and other serious diseases.
Separately, TheStreet Ratings team rates IMMUNOMEDICS INC as a Sell with a ratings score of D. TheStreet Ratings Team has this to say about their recommendation:
"We rate IMMUNOMEDICS INC (IMMU) a SELL. This is driven by a few notable weaknesses, 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 feeble growth in its earnings per share, deteriorating net income, disappointing return on equity, weak operating cash flow and generally high debt management risk."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- IMMUNOMEDICS INC's earnings per share declined by 18.2% in the most recent quarter compared to the same quarter a year ago. Earnings per share have declined over the last two years. We anticipate that this should continue in the coming year. During the past fiscal year, IMMUNOMEDICS INC reported poor results of -$0.41 versus -$0.15 in the prior year. For the next year, the market is expecting a contraction of 24.4% in earnings (-$0.51 versus -$0.41).
- The company, on the basis of change in net income from the same quarter one year ago, has underperformed when compared to that of the S&P 500 and greatly underperformed compared to the Biotechnology industry average. The net income has decreased by 23.7% when compared to the same quarter one year ago, dropping from -$9.51 million to -$11.76 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, IMMUNOMEDICS INC's return on equity significantly trails that of both the industry average and the S&P 500.
- Net operating cash flow has significantly decreased to -$10.81 million or 69.99% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
- The debt-to-equity ratio is very high at 18.04 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 11.81, which shows the ability to cover short-term cash needs.
- You can view the full analysis from the report here: IMMU Ratings Report