NEW YORK ( TheStreet) -- Vanda Pharmaceuticals (Nasdaq: VNDA) has been downgraded by TheStreet Ratings from hold to sell. The company's weaknesses can be seen in multiple areas, such as its unimpressive growth in net income, weak operating cash flow, generally disappointing historical performance in the stock itself and feeble growth in its earnings per share.

Highlights from the ratings report include:
  • 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 Biotechnology industry. The net income has significantly decreased by 196.5% when compared to the same quarter one year ago, falling from $3.18 million to -$3.07 million.
  • The share price of VANDA PHARMACEUTICALS INC has not done very well: it is down 24.91% and has underperformed the S&P 500, in part reflecting the company's sharply declining earnings per share when compared to the year-earlier quarter. The fact that the stock is now selling for less than others in its industry in relation to its current earnings is not reason enough to justify a buy rating at this time.
  • Net operating cash flow has decreased to -$7.17 million or 41.30% when compared to the same quarter last year. Despite a decrease in cash flow VANDA PHARMACEUTICALS INC is still fairing well by exceeding its industry average cash flow growth rate of -64.15%.
  • VANDA PHARMACEUTICALS INC has exprienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. This company has reported somewhat volatile earnings recently. We feel it is likely to report a decline in earnings in the coming year. During the past fiscal year, VANDA PHARMACEUTICALS INC turned its bottom line around by earning $0.25 versus -$1.32 in the prior year. For the next year, the market is expecting a contraction of 172.0% in earnings (-$0.18 versus $0.25).
  • 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 Biotechnology industry and the overall market, VANDA PHARMACEUTICALS INC's return on equity significantly trails that of both the industry average and the S&P 500.

Vanda Pharmaceuticals Inc., a biopharmaceutical company, focuses on the development and commercialization of products for the treatment of central nervous system disorders. Its lead product includes Fanapt for the acute treatment of schizophrenia in adults. The company has a P/E ratio of 37.5, below the average drugs industry P/E ratio of 45.5 and above the S&P 500 P/E ratio of 17.7. Vanda has a market cap of $166.4 million and is part of the health care sector and drugs industry. Shares are down 38.2% year to date as of the close of trading on Monday.

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