NEW YORK (TheStreet) -- Polypore International  (PPO) was falling 9% to $29.99 on Thursday afternoon after William Blairdowngraded the membrane maker to "market perform" from "outperform."

The firm noted that Polypore's relationship with LG Chem is deteriorating. William Blair's research note states through industry sources that LG Chem has stopped buying separator material from Polypore for both consumer-electronic and electric-vehicle applications, and that LG Chem likely will not resume such purchases in the future. Polypore noted in its fourth-quarter earnings report that it "recorded no revenues from LG."

"Given that sales in Polypore's lithium-ion separator segment were also weak in third quarter 2013, we believe it is likely LG Chem has not purchased a material amount of separator from Polypore since second quarter 2013," William Blair said in its research note.

The stock had a much higher volume than usual on Thursday. More than 3.5 million shares had been traded as of 3:20 p.m., compared to the average of 438.374.

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TheStreet Ratings team rates POLYPORE INTERNATIONAL INC as a "hold" with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:

"We rate POLYPORE INTERNATIONAL INC (PPO) 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 good cash flow from operations and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself, feeble growth in the company's earnings per share and deteriorating net income."

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

  • Net operating cash flow has increased to $57.68 million or 44.95% when compared to the same quarter last year. In addition, POLYPORE INTERNATIONAL INC has also vastly surpassed the industry average cash flow growth rate of -13.62%.
  • 40.83% is the gross profit margin for POLYPORE INTERNATIONAL INC which we consider to be strong. Regardless of PPO's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 4.61% trails the industry average.
  • PPO, with its decline in revenue, underperformed when compared the industry average of 7.4%. Since the same quarter one year prior, revenues slightly dropped by 5.8%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • POLYPORE INTERNATIONAL 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. 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, POLYPORE INTERNATIONAL INC reported lower earnings of $1.34 versus $2.24 in the prior year. For the next year, the market is expecting a contraction of 24.6% in earnings ($1.01 versus $1.34).
  • 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 Electrical Equipment industry. The net income has significantly decreased by 50.7% when compared to the same quarter one year ago, falling from $14.23 million to $7.02 million.
  •  You can view the full analysis from the report here: PPO Ratings Report