NEW YORK ( TheStreet) -- Impax Laboratories (Nasdaq: IPXL) has been downgraded by TheStreet Ratings from buy to hold. The company's strengths can be seen in multiple areas, such as its largely solid financial position with reasonable debt levels by most measures, reasonable valuation levels and increase in stock price during the past year. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, weak operating cash flow and feeble growth in the company's earnings per share.

Highlights from the ratings report include:
  • IPXL 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 3.20, which clearly demonstrates the ability to cover short-term cash needs.
  • Compared to where it was a year ago today, the stock is now trading at a higher level, regardless of the company's weak earnings results. Despite the fact that it has already risen in the past year, there is currently no conclusive evidence that warrants the purchase or sale of this stock.
  • 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 Pharmaceuticals industry. The net income has significantly decreased by 60.0% when compared to the same quarter one year ago, falling from $31.35 million to $12.55 million.
  • Net operating cash flow has significantly decreased to -$16.25 million or 108.53% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.

Impax Laboratories, Inc., a specialty pharmaceutical company, engages in the development, manufacture, and marketing of bioequivalent pharmaceutical products. The company operates in two divisions, Global Pharmaceuticals and Impax Pharmaceuticals. The company has a P/E ratio of 9.6, above the average drugs industry P/E ratio of 9.5 and below the S&P 500 P/E ratio of 17.7. Impax has a market cap of $1.1 billion and is part of the health care sector and drugs industry. Shares are down 16.5% year to date as of the close of trading on Monday.

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

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