AVEO Pharmaceuticals Inc. Stock Downgraded (AVEO)

NEW YORK ( TheStreet) -- AVEO Pharmaceuticals (Nasdaq: AVEO) 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, 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 144.0% when compared to the same quarter one year ago, falling from -$10.31 million to -$25.17 million.
  • The share price of AVEO PHARMACEUTICALS INC has not done very well: it is down 7.86% 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.
  • AVEO 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, AVEO PHARMACEUTICALS INC turned its bottom line around by earning $0.99 versus -$1.89 in the prior year. For the next year, the market is expecting a contraction of 397.0% in earnings (-$2.94 versus $0.99).
  • AVEO, with its very weak revenue results, has greatly underperformed against the industry average of 2.9%. Since the same quarter one year prior, revenues plummeted by 90.8%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • 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. When compared to other companies in the Biotechnology industry and the overall market, AVEO PHARMACEUTICALS INC's return on equity has significantly outperformed in comparison with the industry average, but has underperformed when compared to that of the S&P 500.

AVEO Pharmaceuticals, Inc., a biopharmaceutical company, engages in the discovery and development of cancer therapeutics. The company has a P/E ratio of 16.8, above the average drugs industry P/E ratio of 10 and below the S&P 500 P/E ratio of 17.7. AVEO has a market cap of $604.4 million and is part of the health care sector and drugs industry. Shares are down 27.7% year to date as of the close of trading on Monday.

You can view the full AVEO Ratings Report or get investment ideas from our investment research center.
-- Written by a member of TheStreet Ratings Staff