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NEW YORK (TheStreet) -- Ocera Therapeutics (OCRX) stock is popping by 3.55% to $3.50 on heavy trading volume on Tuesday, after the company reported positive trial results from its liver drug.

The drug treatment could be used in the prevention of chronic hepatic encephalopathy, which occurs when liver does not remove toxins from the blood.

The Palo Alto-based company said on Monday that the drug's Phase 1 trial, which was used with healthy subjects, was encouraging.

"Our next step will be to further optimize the formulations to enhance controlled delivery of the drug under various conditions," CEO Linda Grais said in a statement. 

So far today, 3.87 million shares of Ocera have traded, versus its 30-day average of about 31,500 shares. 

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Separately, TheStreet Ratings team rates OCERA THERAPEUTICS INC as a Sell with a ratings score of D. TheStreet Ratings Team has this to say about their recommendation:

We rate OCERA THERAPEUTICS INC (OCRX) 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 disappointing return on equity and generally disappointing historical performance in the stock itself.

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

  • 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 Pharmaceuticals industry and the overall market, OCERA THERAPEUTICS INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • OCRX'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 40.54%, which is also worse than the performance of the S&P 500 Index. 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.
  • The company, on the basis of net income growth from the same quarter one year ago, has significantly underperformed compared to the Pharmaceuticals industry average, but is greater than that of the S&P 500. The net income increased by 0.4% when compared to the same quarter one year prior, going from -$6.60 million to -$6.58 million.
  • OCRX, with its very weak revenue results, has greatly underperformed against the industry average of 3.7%. Since the same quarter one year prior, revenues plummeted by 85.0%. Weakness in the company's revenue seems to not be hurting the bottom line, shown by stable earnings per share.
  • OCERA THERAPEUTICS INC reported flat earnings per share in the most recent quarter. 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, OCERA THERAPEUTICS INC continued to lose money by earning -$1.42 versus -$2.60 in the prior year. This year, the market expects an improvement in earnings (-$1.33 versus -$1.42).
  • You can view the full analysis from the report here: OCRX

Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of Jim Cramer, TheStreet or any of its contributors.