NEW YORK ( TheStreet) -- Transcept Pharmaceuticals (Nasdaq: TSPT) has been downgraded by TheStreet Ratings from hold to sell. Among the areas we feel are negative, one of the most important has been unimpressive growth in net income over time. Highlights from the ratings report include:
- Despite the stagnant revenue growth, the company outperformed against the industry average of 3.6%. Since the same quarter one year prior, revenues have remained constant. Even though the company's revenue remained stagnant, the earnings per share decreased.
- TRANSCEPT PHARMACEUTICALS's earnings per share declined by 11.1% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, TRANSCEPT PHARMACEUTICALS continued to lose money by earning -$0.70 versus -$1.66 in the prior year. This year, the market expects an improvement in earnings ($0.67 versus -$0.70).
- The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. Compared to other companies in the Biotechnology industry and the overall market, TRANSCEPT PHARMACEUTICALS's return on equity significantly trails that of both the industry average and the S&P 500.
- In its most recent trading session, TSPT 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. Turning our attention to the future direction of the stock, we do not believe this stock offers ample reward opportunity to compensate for the risks, despite the fact that it rose over the past year.
- The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed against the S&P 500 and did not exceed that of the Biotechnology industry. The net income has decreased by 12.3% when compared to the same quarter one year ago, dropping from -$2.34 million to -$2.63 million.