NEW YORK ( TheStreet) -- Theravance (Nasdaq: THRX) has been downgraded by TheStreet Ratings from hold to sell. The company's weaknesses can be seen in multiple areas, such as its deteriorating 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 against the S&P 500 and did not exceed that of the Biotechnology industry. The net income has significantly decreased by 44.3% when compared to the same quarter one year ago, falling from -$21.22 million to -$30.63 million.
  • The share price of THERAVANCE INC has not done very well: it is down 19.71% 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 declined marginally to -$19.33 million or 0.76% when compared to the same quarter last year. Despite a decrease in cash flow THERAVANCE INC is still fairing well by exceeding its industry average cash flow growth rate of -14.74%.
  • THERAVANCE INC's earnings per share declined by 27.6% in the most recent quarter compared to 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, THERAVANCE INC continued to lose money by earning -$1.17 versus -$1.36 in the prior year. For the next year, the market is expecting a contraction of 14.5% in earnings (-$1.34 versus -$1.17).
  • The revenue growth came in higher than the industry average of 6.4%. Since the same quarter one year prior, revenues rose by 21.3%. 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.

Theravance, Inc., a biopharmaceutical company, engages in the discovery, development, and commercialization of small molecule medicines for various therapeutic areas, including respiratory disease, bacterial infections, and central nervous system (CNS)/pain. Theravance has a market cap of $1.86 billion and is part of the health care sector and drugs industry. Shares are down 11.9% year to date as of the close of trading on Friday.

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