NEW YORK ( TheStreet) -- WuXi PharmaTech (Cayman (NYSE: WX) has been upgraded by TheStreet Ratings from hold to buy. 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, attractive valuation levels and expanding profit margins. We feel these strengths outweigh the fact that the company has had sub par growth in net income. Highlights from the ratings report include:
- WX's revenue growth has slightly outpaced the industry average of 15.4%. Since the same quarter one year prior, revenues rose by 24.0%. 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.
- WX's debt-to-equity ratio is very low at 0.14 and is currently below that of the industry average, implying that there has been very successful management of debt levels. To add to this, WX has a quick ratio of 2.23, which demonstrates the ability of the company to cover short-term liquidity needs.
- 39.00% is the gross profit margin for WUXI PHARMATECH (CAYMAN)-ADR which we consider to be strong. Regardless of WX's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, WX's net profit margin of 19.80% compares favorably to the industry average.
- WUXI PHARMATECH (CAYMAN)-ADR 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, WUXI PHARMATECH (CAYMAN)-ADR increased its bottom line by earning $1.21 versus $0.72 in the prior year. For the next year, the market is expecting a contraction of 14.9% in earnings ($1.03 versus $1.21).