NEW YORK ( TheStreet) -- Optimer Pharmaceuticals (Nasdaq: OPTR) has been upgraded by TheStreet Ratings from sell 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 compelling growth in net income. However, as a counter to these strengths, we find that the company's profit margins have been poor overall. Highlights from the ratings report include:
- OPTR's very impressive revenue growth greatly exceeded the industry average of 4.4%. Since the same quarter one year prior, revenues leaped by 41320.5%. Growth in the company's revenue appears to have helped boost the earnings per share.
- OPTR 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 5.41, 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, reflecting both the market's overall trend during that period and the fact that the company's earnings growth has been robust. We feel that the combination of its price rise over the last year and its current price-to-earnings ratio relative to its industry tend to reduce its upside potential.
- The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. In comparison to the other companies in the Pharmaceuticals industry and the overall market, OPTIMER PHARMACEUTICALS INC's return on equity is significantly below that of the industry average and is below that of the S&P 500.
- The gross profit margin for OPTIMER PHARMACEUTICALS INC is rather low; currently it is at 24.40%. Despite the low profit margin, it has increased significantly from the same period last year. Despite the mixed results of the gross profit margin, OPTR's net profit margin of 20.70% compares favorably to the industry average.
-- Written by a member of TheStreet RatingsStaff