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) -- Cepheid (Nasdaq: CPHD) has been downgraded by TheStreet Ratings from hold to sell. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income, disappointing return on equity, generally disappointing historical performance in the stock itself and feeble growth in its earnings per share.
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- 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 1208.0% when compared to the same quarter one year ago, falling from $1.92 million to -$21.30 million.
- The share price of CEPHEID INC has not done very well: it is down 16.37% 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. Turning toward the future, the fact that the stock has come down in price over the past year should not necessarily be interpreted as a negative; it could be one of the factors that may help make the stock attractive down the road. Right now, however, we believe that it is too soon to buy.
- Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. When compared to other companies in the Biotechnology industry and the overall market, CEPHEID 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.
- CEPHEID 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, CEPHEID INC turned its bottom line around by earning $0.04 versus -$0.10 in the prior year. For the next year, the market is expecting a contraction of 1100.0% in earnings (-$0.40 versus $0.04).
- The gross profit margin for CEPHEID INC is rather high; currently it is at 53.30%. Regardless of CPHD's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, CPHD's net profit margin of -26.50% significantly underperformed when compared to the industry average.
-- Written by a member of TheStreet Ratings Staff