NEW YORK (TheStreet) -- Bridgeline Digital (BLIN) - Get Report was gaining 42.6% to $1.26 Friday one news of a $7 million licensing iAPPSds agreement.

The software company announced it signed a multi-year agreement with an unnamed leading healthcare communications technology company in North America. The deal will deploy Bridgeline's iAPPSds to power the websites of 3,700 independent physicians and dentists.

The initial deal will last three years, and is valued at about $7 million in licensing fees and related services.

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

"We rate BRIDGELINE DIGITAL INC (BLIN) a SELL. This is driven by multiple 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 deteriorating net income, disappointing return on equity, weak operating cash flow and generally disappointing historical performance in the stock itself."

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

  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Internet Software & Services industry. The net income has decreased by 21.0% when compared to the same quarter one year ago, dropping from -$0.64 million to -$0.78 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 Internet Software & Services industry and the overall market, BRIDGELINE DIGITAL 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 -$1.43 million or 470.46% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
  • BLIN has underperformed the S&P 500 Index, declining 23.19% from its price level of one year ago. The fact that the stock is now selling for less than others in its industry in relation to its current earnings is not reason enough to justify a buy rating at this time.
  • BRIDGELINE DIGITAL INC reported flat earnings per share in the most recent quarter. The company has reported a trend of declining earnings per share over the past year. However, the consensus estimate suggests that this trend should reverse in the coming year. During the past fiscal year, BRIDGELINE DIGITAL INC reported poor results of -$0.23 versus -$0.07 in the prior year. This year, the market expects an improvement in earnings (-$0.15 versus -$0.23).
  • You can view the full analysis from the report here: BLIN Ratings Report

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Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.