Ariad Pharmaceuticals Stock Downgraded (ARIA)

Editor's Note: TheStreet ratings do not represent the views of TheStreet's staff or its contributors. Ratings are established by computer based on metrics for performance (which includes growth, stock performance, efficiency and valuation) and risk (volatility and solvency). Companies with poor cash flow or high debt levels tend to earn lower ratings in our model.

NEW YORK ( TheStreet) -- Ariad Pharmaceuticals (Nasdaq: ARIA) has been downgraded by TheStreet Ratings from hold to sell. The company's weaknesses can be seen in multiple areas, such as its feeble growth in its earnings per share, deteriorating net income and weak operating cash flow.

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Highlights from the ratings report include:
  • ARIAD 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. Earnings per share have declined over the last two years. We anticipate that this should continue in the coming year. During the past fiscal year, ARIAD PHARMACEUTICALS INC swung to a loss, reporting -$0.93 versus $0.71 in the prior year. For the next year, the market is expecting a contraction of 41.9% in earnings (-$1.32 versus -$0.93).
  • 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 482.6% when compared to the same quarter one year ago, falling from $13.91 million to -$53.21 million.
  • Net operating cash flow has significantly decreased to -$44.43 million or 1017.46% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
  • 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. Compared to other companies in the Biotechnology industry and the overall market, ARIAD PHARMACEUTICALS INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • ARIA, with its very weak revenue results, has greatly underperformed against the industry average of 6.2%. Since the same quarter one year prior, revenues plummeted by 99.7%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
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ARIAD Pharmaceuticals, Inc., an oncology company, focuses on the discovery, development, and commercialization of medicines for cancer patients. The company has a P/E ratio of -23.8, below the S&P 500 P/E ratio of 17.7. Ariad has a market cap of $3.67 billion and is part of the health care sector and drugs industry. Shares are up 80.3% year to date as of the close of trading on Thursday.

You can view the full Ariad Ratings Report or get investment ideas from our investment research center.

-- Written by a member of TheStreet Ratings Staff

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