NEW YORK (TheStreet) -- LipoScience (LPDX) fell more than 21% to a one-year low of $2.97 just before 2 p.m. on Friday after the diagnostics technology company decreased its first-quarter guidance to less than analysts' estimates after it ended its contract with Health Diagnostic Laboratory.
The company reduced its guidance to $11.8 million from $12.2 million, which is less than the Capital IQ consensus estimate of $12.24 million. LipoScience decided to terminate the contract once Health Diagnostic Laboratory introduced its own test to measure low density lipoprotein particles.
Must Read: Warren Buffett's 10 Favorite Stocks
TheStreet Ratings team rates LIPOSCIENCE INC as a "sell" with a ratings score of D. TheStreet Ratings Team has this to say about their recommendation:
"We rate LIPOSCIENCE INC (LPDX) a SELL. This is driven by several 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 feeble growth in its earnings per share."
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 Biotechnology industry. The net income has significantly decreased by 1455.4% when compared to the same quarter one year ago, falling from $0.19 million to -$2.62 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, LIPOSCIENCE 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 -$1.20 million or 123.10% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
- LIPOSCIENCE INC has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. The company has reported a trend of declining earnings per share over the past two years. However, the consensus estimate suggests that this trend should reverse in the coming year. During the past fiscal year, LIPOSCIENCE INC swung to a loss, reporting -$0.86 versus $0.08 in the prior year. This year, the market expects an improvement in earnings (-$0.76 versus -$0.86).
- LPDX, with its decline in revenue, underperformed when compared the industry average of 14.6%. Since the same quarter one year prior, revenues slightly dropped by 6.2%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
- You can view the full analysis from the report here: LPDX Ratings Report
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.