The following ratings changes were generated on Tuesday, Feb. 3.

We've downgraded Cytec Industries ( CYT), a specialty chemicals and materials company, from hold to sell, driven by its deteriorating net income, disappointing return on equity, poor profit margins, weak operating cash flow and generally disappointing historical performance in the stock itself.

Net income decreased significantly, by 837%, compared with the year-ago quarter, underperforming both the S&P 500 and the chemicals industry. Return on equity also greatly decreased, a signal of major weakness within the corporation. Net operating cash flow fell 22.7% to $58.2 million. Cytec's 21.3% gross profit margin is rather low, having decreased from the year-ago quarter, and its net profit margin of -50.2% is significantly below the industry average.

Shares tumbled 67.6% over the year, underperforming the S&P 500, and EPS are down 861.9% compared with the year-earlier quarter. Naturally, the overall market trend is bound to be a significant factor, and in one sense, the stock's sharp decline last year is a positive for future investors, making it cheaper (in proportion to its earnings over the past year) than most other stocks in its industry. But due to other concerns, we feel the stock is still not a good buy right now.

We've upgraded managed care organization HealthSpring ( HS) from hold to buy, driven by its robust revenue growth, largely solid financial position with reasonable debt levels by most measures, impressive record of earnings-per-share growth, compelling growth in net income and attractive valuation levels. We feel these strengths outweigh the fact that the company shows low profit margins.

Revenue rose by 44% since the same quarter last year, outperforming the industry average of 10.3% growth and boosting EPS by 35.9%. The company has demonstrated a pattern of positive earnings per share growth over the past year, which we feel that should continue. Net income increased by 31.3% compared with the year-ago quarter, from $22.4 million to $29.4 million.

HealthSpring's 0.4 debt-to-equity ratio is low and below the industry average, implying successful management of debt levels, and its 1.4 quick ratio illustrates its ability to avoid short-term cash problems.

We've downgraded real estate investment trust Plum Creek Timber ( PCL) from buy to hold. Strengths include its respectable return on equity, which we feel is likely to continue. At the same time, we also find weaknesses including feeble growth in the company's earnings per share, poor profit margins and weak operating cash flow.

Return on equity improved slightly compared with the year-ago quarter, outperforming the S&P 500 and the REIT industry, but revenue dropped by 8.5%. EPS fell 16.2% in the most recent quarter compared with the year-ago quarter and have declined over the last year, a trend we anticipate should continue. Plum Creek's gross profit margin of 22.6% is rather low, having decreased since the year-ago quarter, and its net profit margin of 20.6% trails the industry average.

We've upgraded PartnerRe ( PRE), which provides reinsurance solutions worldwide, from hold to buy, driven by its revenue growth and largely solid financial position with reasonable debt levels by most measures. We feel these strengths outweigh the fact that the company has had lackluster performance in the stock itself.

Revenue increased slightly, by 9.5%, since the same quarter last year, outperforming the industry average of 6.6% growth, but EPS declined by 49.7%. The company has suffered a declining pattern of earnings per share over the past two years, but we anticipate this trend to reverse over the coming year Net income decreased by 47.2% compared with the year-ago quarter, falling from $180.6 million to $95.3 million.

PartnerRe's debt-to-equity ratio is very low at 0.2 and currently below the industry average, implying very successful management of debt levels. Its 13.2% gross profit margin is extremely low, having decreased from the same period last year, but the company's net profit margin of 7.9% is above the industry average.

We've upgraded Starent Networks ( STAR), which provides infrastructure hardware and software products and services that enable mobile operators to deliver multimedia services to their subscribers worldwide, from sell to hold. Strengths include its robust revenue growth, largely solid financial position with reasonable debt levels by most measures and notable return on equity. However, as a counter to these strengths, we find that the stock itself is trading at a premium valuation.

Revenue rose by 39.5% since the same quarter a year ago, outperforming the 11.7% industry average and boosting EPS significantly. The company has demonstrated a pattern of positive EPS growth over the past year, but we anticipate underperformance relative to this pattern in the coming year. Starent has no debt to speak of and a quick ratio of 2.4, which demonstrates the company's ability to cover short-term liquidity needs.

Shares are down 8.9% on the year, reflecting, in part, the market's overall decline. The fact that the stock has come down in price over the past year could be one of the factors that may help make the stock attractive down the road, but we believe right now that it is too soon to buy.

Other ratings changes include Regency Energy ( RGNC), upgraded from sell to hold, and Standex ( SXI), downgraded from buy to hold.

All ratings changes generated on Feb. 3 are listed below.

Ticker
Company
Current
Change
Previous
AAIR
AvantAir
SELL
Initiated
ABNJ
American Bancorp
BUY
Upgrade
HOLD
AEPI
AEP Industries
HOLD
Upgrade
SELL
BSY
British Sky Broadcasting
HOLD
Upgrade
SELL
BWEN
Broadwind Energy
SELL
Initiated
CYT
Cytec Industries
SELL
Downgrade
HOLD
FFNW
First Financial Northwest
HOLD
Upgrade
SELL
HS
HealthSpring
BUY
Upgrade
HOLD
MXGL
Max Capital Group
HOLD
Upgrade
SELL
NMM
Navios Maritime Partners
SELL
Initiated
PAR
3Par
HOLD
Initiated
PCL
Plum Creek Timber
HOLD
Downgrade
BUY
PRE
Partnerre
BUY
Upgrade
HOLD
RGNC
Regency Energy Partners
HOLD
Upgrade
SELL
STAR
Starent Networks
HOLD
Upgrade
SELL
SXI
Standex International
HOLD
Downgrade
BUY
WSTG
Wayside Technology Group
BUY
Upgrade
HOLD

Each business day, TheStreet.com Ratings updates its ratings on the stocks it covers. The proprietary ratings model projects a stock's total return potential over a 12-month period, including both price appreciation and dividends. Buy, hold or sell ratings designate how the Ratings group expects these stocks to perform against a general benchmark of the equities market and interest rates.

While the ratings model is quantitative, it uses both subjective and objective elements. For instance, subjective elements include expected equities market returns, future interest rates, implied industry outlook and company earnings forecasts. Objective elements include volatility of past operating revenue, financial strength and company cash flows.

However, the rating does not incorporate all of the factors that can alter a stock's performance. For example, it doesn't always factor in recent corporate or industry events that could affect the stock price, nor does it include recent technology developments and competitive dynamics that may affect the company.

For those reasons, we believe a rating alone cannot tell the whole story, and that it should be part of an investor's overall research.

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