NEW YORK ( TheStreet) -- Quidel Corporation (Nasdaq: QDEL) has been upgraded by TheStreet Ratings from hold to buy. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures, expanding profit margins, good cash flow from operations and increase in net income. We feel these strengths outweigh the fact that the company has had somewhat disappointing return on equity.

Highlights from the ratings report include:
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Health Care Equipment & Supplies industry. The net income increased by 554.8% when compared to the same quarter one year prior, rising from -$2.52 million to $11.45 million.
  • Net operating cash flow has significantly increased by 282.84% to $25.64 million when compared to the same quarter last year. In addition, QUIDEL CORP has also vastly surpassed the industry average cash flow growth rate of -14.82%.
  • The gross profit margin for QUIDEL CORP is rather high; currently it is at 63.40%. It has increased significantly from the same period last year. Along with this, the net profit margin of 19.20% is above that of the industry average.
  • QDEL's debt-to-equity ratio is very low at 0.27 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 4.31, which clearly demonstrates the ability to cover short-term cash needs.
  • QDEL's very impressive revenue growth greatly exceeded the industry average of 1.3%. Since the same quarter one year prior, revenues leaped by 110.0%. Growth in the company's revenue appears to have helped boost the earnings per share.

Quidel Corporation, together with its subsidiaries, engages in the development, manufacture, and marketing of diagnostic testing solutions for applications primarily in infectious diseases, and reproductive and women's health. The company has a P/E ratio of 305.2, below the average drugs industry P/E ratio of 381.5 and above the S&P 500 P/E ratio of 17.7. Quidel has a market cap of $506.1 million and is part of the health care sector and drugs industry. Shares are up 6.2% year to date as of the close of trading on Wednesday.

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