NEW YORK ( TheStreet) -- Pharmacyclics Incorporated (Nasdaq: PCYC) has been downgraded by TheStreet Ratings from buy to hold. The company's strengths can be seen in multiple areas, such as its largely solid financial position with reasonable debt levels by most measures, notable return on equity and solid stock price performance. However, as a counter to these strengths, we also find weaknesses including unimpressive growth in net income and feeble growth in the company's earnings per share. Highlights from the ratings report include:
- PCYC 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.
- 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, PHARMACYCLICS 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.
- PCYC, with its decline in revenue, underperformed when compared the industry average of 4.8%. Since the same quarter one year prior, revenues slightly dropped by 6.4%. The declining revenue appears to have seeped down to the company's bottom line, decreasing earnings per share.
- PHARMACYCLICS INC's earnings per share declined by 26.7% in the most recent quarter compared to the same quarter a year ago. The company has reported a trend of declining earnings per share over the past year. However, the consensus estimate suggests that this trend should reverse in the coming year. During the past fiscal year, PHARMACYCLICS INC reported poor results of -$0.59 versus -$0.31 in the prior year. This year, the market expects an improvement in earnings ($0.16 versus -$0.59).
- 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 39.1% when compared to the same quarter one year ago, falling from -$9.22 million to -$12.82 million.
-- Written by a member of TheStreet Ratings Staff