The following ratings changes were generated on Thursday, Oct. 30. We've upgraded biopharmaceutical company Cephalon ( CEPH) from hold to buy, driven by its compelling growth in net income, revenue growth, notable return on equity, reasonable valuation levels and good cash flow from operations. We feel these strengths outweigh the fact that the company shows low profit margins. Net income rose 136.5% when compared with the same quarter a year ago, from -$306.76 million to $112.04 million, outperforming the S&P 500 and the biotechnology industry. Revenue rose by 13.7%, boosting earnings per share but underperforming the industry average of 17.3%. Return on equity greatly increased over the same quarter last year, a signal of significant strength within the corporation, outperforming the industry and the overall market. Net operating cash flow increased to $162.13 million, or 31.27% when compared with the same quarter last year, vastly surpassing the industry average cash flow growth rate of -96.59%. We've downgraded Herbalife ( HLF), which sells weight management, nutritional supplement, energy and fitness, and personal care products worldwide, from buy to hold. Strengths include its robust revenue growth, notable return on equity and expanding profit margins. Weaknesses include generally poor debt management, weak operating cash flow and a generally disappointing performance in the stock itself. Revenue for the quarter rose 20.7% year over year, slightly outpacing the industry average of 16.6% and appearing to have helped boost EPS, which rose significantly over the year-ago quarter. The company has demonstrated a pattern of positive earnings per share growth over the past two years that we think will continue. During the past fiscal year, Herbalife increased its bottom line by earning $2.64 vs. $1.94 in the prior year. This year, the market expects further improvement in earnings to $3.70.