NEW YORK ( TheStreet) -- Bio-Reference Labs (Nasdaq: BRLI) 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 impressive record of earnings per share growth. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself and weak operating cash flow.

Highlights from the ratings report include:
  • The revenue growth came in higher than the industry average of 10.9%. Since the same quarter one year prior, revenues rose by 21.6%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • BRLI's debt-to-equity ratio is very low at 0.26 and is currently below that of the industry average, implying that there has been very successful management of debt levels. To add to this, BRLI has a quick ratio of 1.91, which demonstrates the ability of the company to cover short-term liquidity needs.
  • The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Health Care Providers & Services industry and the overall market on the basis of return on equity, BIO REFERENCE LABS has underperformed in comparison with the industry average, but has exceeded that of the S&P 500.
  • Net operating cash flow has significantly decreased to $1.31 million or 65.53% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
  • BRLI's stock share price has done very poorly compared to where it was a year ago: Despite any rallies, the net result is that it is down by 42.20%, which is also worse that the performance of the S&P 500 Index. Investors have so far failed to pay much attention to the earnings improvements the company has managed to achieve over the last quarter. Although its share price is down sharply from a year ago, do not assume that it can now be tagged as cheap and attractive. The reality is that, based on its current price in relation to its earnings, BRLI is still more expensive than most of the other companies in its industry.

Bio-Reference Laboratories, Inc. provides clinical laboratory testing services for the detection, diagnosis, evaluation, monitoring, and treatment of diseases primarily in the greater New York metropolitan area. The company has a P/E ratio of 9.9, below the average health services industry P/E ratio of 10.3 and below the S&P 500 P/E ratio of 17.7. Bio-Reference has a market cap of $354.7 million and is part of the health care sector and health services industry. Shares are down 45.2% year to date as of the close of trading on Friday.

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

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