NEW YORK ( TheStreet) -- Gentium SpA (Nasdaq: GENT) 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 and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including feeble growth in the company's earnings per share, deteriorating net income and weak operating cash flow. Highlights from the ratings report include:
- GENT's debt-to-equity ratio is very low at 0.12 and is currently below that of the industry average, implying that there has been very successful management of debt levels. To add to this, GENT has a quick ratio of 1.72, which demonstrates the ability of the company to cover short-term liquidity needs.
- The gross profit margin for GENTIUM SPA -ADR is currently very high, coming in at 87.40%. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of -16.10% is in-line with the industry average.
- GENT, with its decline in revenue, underperformed when compared the industry average of 4.0%. Since the same quarter one year prior, revenues fell by 12.1%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
- 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 150.2% when compared to the same quarter one year ago, falling from $2.41 million to -$1.21 million.
- Net operating cash flow has decreased to $0.95 million or 30.73% when compared to the same quarter last year. In conjunction, when comparing current results to the industry average, GENTIUM SPA -ADR has marginally lower results.
-- Written by a member of TheStreet Ratings Staff