NEW YORK ( TheStreet) -- Quidel Corporation (Nasdaq: QDEL) has been downgraded by TheStreet Ratings from buy to hold. 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 and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, disappointing return on equity and feeble growth in the company's earnings per share.

Highlights from the ratings report include:
  • Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Health Care Equipment & Supplies industry and the overall market, QUIDEL CORP's return on equity significantly trails that of both the industry average and the S&P 500.
  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Health Care Equipment & Supplies industry. The net income has significantly decreased by 48.4% when compared to the same quarter one year ago, falling from -$2.47 million to -$3.66 million.
  • 48.00% is the gross profit margin for QUIDEL CORP which we consider to be strong. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of -13.30% is in-line with the industry average.
  • Although QDEL's debt-to-equity ratio of 0.27 is very low, it is currently higher than that of the industry average.
  • QDEL's revenue growth has slightly outpaced the industry average of 6.8%. Since the same quarter one year prior, revenues slightly increased by 9.9%. 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.

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 292.4, below the average drugs industry P/E ratio of 365.5 and above the S&P 500 P/E ratio of 17.7. Quidel has a market cap of $484.9 million and is part of the health care sector and drugs industry. Shares are down 0.9% 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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