NEW YORK (TheStreet) -- Shares of Rockwell Medical(RMTI) - Get Report were falling 8.9% to $12.51 on heavy trading volume Thursday after Morgan Stanley initiated coverage of the drug manufacturer.

In a note to investors, Morgan Stanley initiated coverage of Rockwell Medical with an "underweight" rating, according to Benzinga. The analyst firm set a price target of $7 for the company.

The analyst firm said it believes Rockwell's drug for patients on dialysis, Triferic, will take longer to gain a hold in the market than expected. Analyst Andrew Berens said discussions with external clinicians and dialysis center visits, and a survey of nephrologists led a "high" conviction that Triferic will have "an anemic launch."

Berens wrote that "we have confirmation that Fresenius, which comprises 35% of the market, as of June, had no plans to test or use Triferic."

About 2.2 million shares of Rockwell were traded by 12:35 p.m. Thursday, above the company's average trading volume of about 847,000 shares a day.

TheStreet Ratings team rates ROCKWELL MEDICAL INC as a Hold with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:

"We rate ROCKWELL MEDICAL INC (RMTI) a HOLD. The primary factors that have impacted our rating are mixed -- some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its solid stock price performance, impressive record of earnings per share growth and compelling growth in net income. However, as a counter to these strengths, we also find weaknesses including weak operating cash flow and poor profit margins."

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

  • Powered by its strong earnings growth of 37.50% and other important driving factors, this stock has surged by 26.50% over the past year, outperforming the rise in the S&P 500 Index during the same period. Regarding the stock's future course, our hold rating indicates that we do not recommend additional investment in this stock despite its gains in the past year.
  • ROCKWELL MEDICAL INC has improved earnings per share by 37.5% 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. We feel that this trend should continue. This trend suggests that the performance of the business is improving. During the past fiscal year, ROCKWELL MEDICAL INC continued to lose money by earning -$0.52 versus -$1.65 in the prior year. This year, the market expects an improvement in earnings (-$0.14 versus -$0.52).
  • Compared to other companies in the Health Care Equipment & Supplies industry and the overall market, ROCKWELL MEDICAL INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • The gross profit margin for ROCKWELL MEDICAL INC is rather low; currently it is at 17.48%. Regardless of RMTI's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, RMTI's net profit margin of -19.58% significantly underperformed when compared to the industry average.
  • Net operating cash flow has significantly decreased to -$6.39 million or 96.76% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
  • You can view the full analysis from the report here: RMTI Ratings Report