NEW YORK ( TheStreet) -- Given Imaging (Nasdaq: GIVN) 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 expanding profit margins. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself, deteriorating net income and disappointing return on equity.

Highlights from the ratings report include:
  • In its most recent trading session, GIVN 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. Looking ahead, we do not see anything in this company's numbers that would change the one-year trend. It was down over the last twelve months; and it could be down again in the next twelve. Naturally, a bull or bear market could sway the movement of this stock.
  • Net operating cash flow has significantly decreased to -$1.12 million or 127.65% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
  • The gross profit margin for GIVEN IMAGING is currently very high, coming in at 82.40%. It has increased from the same quarter the previous year. Despite the strong results of the gross profit margin, GIVN's net profit margin of 1.70% significantly trails the industry average.
  • GIVN's debt-to-equity ratio is very low at 0.00 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 3.20, which clearly demonstrates the ability to cover short-term cash needs.
  • The revenue growth came in higher than the industry average of 0.7%. Since the same quarter one year prior, revenues rose by 24.5%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.

Given Imaging Ltd. develops, manufactures, and markets diagnostic products for the visualization and detection of gastrointestinal tract disorders. The company offers Given System, a wireless imaging system that uses PillCam capsules, which are disposable video capsules. The company has a P/E ratio of 32, below the average health services industry P/E ratio of 73.1 and above the S&P 500 P/E ratio of 16.9. Given Imaging has a market cap of $610.3 million and is part of the health care sector and health services industry. Shares are up 38.8% year to date as of the previous trading day's close.

You can view the full Given Imaging Ratings Report or get investment ideas from our investment research center.
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