NEW YORK ( TheStreet) -- Genomic Health (Nasdaq: GHDX) has been upgraded by TheStreet Ratings from hold to buy. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures, expanding profit margins and solid stock price performance. We feel these strengths outweigh the fact that the company has had sub par growth in net income.
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- GHDX's revenue growth has slightly outpaced the industry average of 7.4%. Since the same quarter one year prior, revenues rose by 13.3%. 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.
- GHDX 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 5.96, which clearly demonstrates the ability to cover short-term cash needs.
- The gross profit margin for GENOMIC HEALTH INC is currently very high, coming in at 86.60%. It has increased from the same quarter the previous year. Despite the strong results of the gross profit margin, GHDX's net profit margin of 3.10% significantly trails the industry average.
- Compared to its closing price of one year ago, GHDX's share price has jumped by 47.70%, exceeding the performance of the broader market during that same time frame. We feel that the stock's sharp appreciation over the last year has driven it to a price level which is now somewhat expensive compared to the rest of its industry. The other strengths this company shows, however, justify the higher price levels.
- GENOMIC HEALTH INC's earnings per share declined by 25.0% in the most recent quarter compared to 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, GENOMIC HEALTH INC increased its bottom line by earning $0.25 versus $0.14 in the prior year. For the next year, the market is expecting a contraction of 29.6% in earnings ($0.18 versus $0.25).
-- Written by a member of TheStreet Ratings Staff