NEW YORK ( TheStreet) -- Biostar Pharmaceuticals (Nasdaq: BSPM) has been downgraded by TheStreet Ratings from hold to sell. Among the areas we feel are negative, one of the most important has been a generally disappointing historical performance in the stock itself. Highlights from the ratings report include:
- Current return on equity exceeded its ROE from the same quarter one year prior. This is a clear sign of strength within the company. Compared to other companies in the Pharmaceuticals industry and the overall market, BIOSTAR PHARMACEUTICALS INC's return on equity significantly exceeds that of both the industry average and the S&P 500.
- BSPM has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign. Along with this, the company maintains a quick ratio of 5.50, which clearly demonstrates the ability to cover short-term cash needs.
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Pharmaceuticals industry. The net income increased by 261.7% when compared to the same quarter one year prior, rising from $1.69 million to $6.11 million.
- BIOSTAR PHARMACEUTICALS INC reported significant earnings per share improvement 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. We feel that this trend should continue. This trend suggests that the performance of the business is improving. During the past fiscal year, BIOSTAR PHARMACEUTICALS INC increased its bottom line by earning $0.63 versus $0.33 in the prior year. This year, the market expects an improvement in earnings ($0.70 versus $0.63).
- BSPM's stock share price has done very poorly compared to where it was a year ago: Despite any rallies, the net result is that it is down by 62.45%, which is also worse that the performance of the S&P 500 Index. Investors have so far failed to pay much attention to the earnings improvements the company has managed to achieve over the last quarter. Naturally, the overall market trend is bound to be a significant factor. However, 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.