The following ratings changes were generated on Monday, Feb. 9.

We've initiated coverage of medical aesthetics company BioForm Medical ( BFRM) at sell, driven by generally deteriorating net income.

Net income fell from -$1.6 million in the year-ago quarter to -$7.9 million in the most recent quarter, significantly underperforming both the S&P 500 and the pharmaceuticals industry. Revenue fell by 10.4%, underperforming the industry average, and earnings per share experienced a steep decline. This year, however, the market expects an improvement in earnings. BioForm's gross profit margin is very high at 83.1%, though it has decreased from the same period last year. The company's net profit margin of -47.2% significantly underperformed the industry average. BioForm's ROE significantly trails the industry average and that of the S&P 500.

We've initiated coverage on fables semiconductor company Entropic Communications ( ENTR) at sell, driven by its deteriorating net income and feeble growth in its earnings per share.

Net income decreased from $490,000 in the year-ago quarter to -$118.9 million, significantly underperforming the S&P 500 and the semiconductors and semiconductor equipment industry. Revenue fell by 26.5%, and EPS also declined steeply, by 17,300%. The company has reported a trend of declining it trend should reverse in the coming year. Entropic underperforms both the industry and the S&P 500 on the basis of ROE.

Shares have tumbled 89.4% over the year, worse that the S&P 500's performance.

We've upgraded GSE Systems ( GVP), which provides simulation and educational solutions and services to nuclear and fossil electric utility, and chemical and petrochemical industries, from sell to hold. Strengths include the company's increase in net income, largely solid financial position with reasonable debt levels by most measures and good cash flow from operations. However, we also find weaknesses including disappointing return on equity, premium valuation and poor profit margins.

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