NEW YORK ( TheStreet) -- WuXi PharmaTech (Cayman (NYSE: WX) has been downgraded by TheStreet Ratings from buy to hold. The company's strengths can be seen in multiple areas, such as 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 has experienced relatively poor performance when compared with the S&P 500 during the past year. Highlights from the ratings report include:
- In its most recent trading session, WX has closed at a price level that was not very different from its closing price of one year earlier. This is probably due to its weak earnings growth as well as other mixed factors. Despite the fact that it has already risen in the past year, there is currently no conclusive evidence that warrants the purchase or sale of this stock.
- WUXI PHARMATECH (CAYMAN)-ADR has improved earnings per share by 35.3% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. However, we anticipate underperformance relative to this pattern in the coming year. During the past fiscal year, WUXI PHARMATECH (CAYMAN)-ADR increased its bottom line by earning $1.21 versus $0.72 in the prior year. For the next year, the market is expecting a contraction of 17.4% in earnings ($1.00 versus $1.21).
- 47.80% is the gross profit margin for WUXI PHARMATECH (CAYMAN)-ADR which we consider to be strong. Regardless of WX's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, WX's net profit margin of 19.50% compares favorably to the industry average.
- WX's debt-to-equity ratio is very low at 0.10 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Along with this, the company maintains a quick ratio of 3.57, which clearly demonstrates the ability to cover short-term cash needs.
- The revenue growth came in higher than the industry average of 1.5%. Since the same quarter one year prior, revenues rose by 19.9%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.