The following ratings changes were generated on Wednesday, March 18.

We've downgraded biotechnology company Abraxis BioScience ( ABII) from hold to sell, driven by its feeble growth in its earnings per share and deteriorating net income.

Earnings per share declined steeply in the most recent quarter compared with the same quarter last year; in fact, the company has suffered a two-year pattern of declining EPS. Nte income fell from -$5.2 million in the year-ago quarter to -$181.9 million, significantly underperforming the S&P 500 and the biotechnology industry. The 93.5% gross profit margin is very high, though it has decreased from the same period last year. The -197.3% net profit margin significantly underperformed the industry average. Return on equity significantly underperforms the industry average and the S&P 500.

Shares are down 15.5% over the past year, reflecting in part the market's overall decline, which was actually deeper.

We've downgraded electronics distributor Arrow Electronics ( ARW) from hold to sell, driven by its deteriorating net income, disappointing return on equity, poor profit margins, generally disappointing historical performance in the stock itself and feeble growth in its earnings per share.

Net income fell from $114 million in the year-ago quarter to -$871.9 million in the most recent quarter, significantly underperforming the S&P 500 and the electronic equipment, instruments and components industry. ROE also greatly decreased, a signal of major weakness within the corporations. Arrow's 12.7% gross profit margin is extremely low, having decreased from the year-ago quarter. EPS have declined by 893.5% compared with the year-ago quarter, though the consensus estimate suggests that the company's two-year trend of declining EPS should reverse in the coming year.

Shares have fallen by 42.3% over the past year, in part reflecting the overall decline of the market. 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 initiated coverage on El Paso Pipeline Partners ( EPB), which engages in the ownership and operation of natural gas transportation pipelines, at hold. Strengths include the company's robust revenue growth, notable return on equity and expanding profit margins. However, we also find weaknesses including premium valuation, a decline in the stock price during the past year and generally poor debt management.

Revenue rose by 30.9% compared with the same quarter last year, outperforming the industry average of 21% growth. EPS improved significantly, and we feel the company's yearlong trend of positive EPS growth should continue, suggesting that business performance is improving.

Shares are down 10.6% over the past year, in part reflecting the market's overall decline. Other than the push or pull of the broad market, we do not see anything in the company's numbers that may help reverse the decline experienced over the past 12 months. Despite the past decline, the stock is still selling for more than most others in its industry.

We've downgraded Penn National Gaming ( PENN), which engages in the ownership and operation of gaming and pari-mutuel properties, from hold to sell. This rating is driven by the company's deteriorating net income, disappointing return on equity, weak operating cash flow, generally weak debt management and generally disappointing historical performance in the stock itself.

Net income fell from $32.2 million in the year-ago quarter to -$378.6 million in the most recent quarter, significantly underperforming the S&P 500 and the hotels, restaurants and leisure industry. ROE also greatly decreased, a signal of major weakness. Net operating cash flow decreased 41.6% to $49.7 million compared with the same quarter last year. Penn's 1.2 debt-to-equity ratio is relatively high compared with the industry average, suggesting a need for better debt-level management, but its 1.7 quick ratio is strong, demonstrating its ability to cover short-term cash needs.

Shares have fallen 43.2% over the past year, reflecting the overall market decline as well as the company's 1,425% decline in EPS. 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 downgraded WellCare Health Plans ( WCG), which provides managed care services to government-sponsored health care programs, from hold to sell. This rating is driven by the company's deteriorating net income, disappointing return on equity, poor profit margins, generally disappointing historical performance in the stock itself and feeble growth in its earnings per share.

Net income fell from $59.2 million in the year-ago quarter to -$31.1 million, significantly underperforming the S&P 500 and the health care providers and services industry. ROE also greatly decreased, a signal of major weakness. WellCare's 18.1% gross profit margin is rather low, having decreased from the year-ago quarter, and its -1.9% net profit margin trails the industry average. EPS declined by 153.2% compared with the year-earlier quarter, but the consensus estimate suggests that in the coming year, the company's two-year trend of declining EPS should reverse.

Shares tumbled 76% over the past year, underperforming the S&P 500. 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.

Other ratings changes include Clean Harbors ( CLH), downgraded from buy to hold, and Hilltop Holdings ( HTH), upgraded from sell to hold.

All ratings changes generated on March 18 are listed below.

Ticker
Company
Current
Change
Previous
ABII
Abraxis Bioscience
SELL
Downgrade
HOLD
ADAM
A.D.A.M.
SELL
Downgrade
HOLD
AIRV
Airvana
HOLD
Initiated
ARW
Arrow Electronics
SELL
Downgrade
HOLD
CLH
Clean Harbors
HOLD
Downgrade
BUY
EPB
El Paso Pipeline Partners
HOLD
Initiated
GAI
Global-Tech Advanced Innovations
SELL
Downgrade
HOLD
HOFD
HomeFed
SELL
Downgrade
HOLD
HTH
Hilltop Holdings
HOLD
Upgrade
SELL
PENN
Penn National Gaming
SELL
Downgrade
HOLD
UTGN
UTG
SELL
Downgrade
HOLD
WCG
WellCare Health Plans
SELL
Downgrade
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.

Our quantitative model makes stock recommendations based on GAAP (generally accepted accounting principles) figures that may differ materially from data as reported by the companies themselves. As a result, rating changes are occasionally driven by so-called nonrecurring items. As always, we urge readers to use TSC Ratings in conjunction with additional information to construct their opinions on the value that should be placed on any given stock.

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