Watson Pharmaceuticals Inc. (WPI): Today's Featured Health Care Laggard

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.

Watson Pharmaceuticals ( WPI) pushed the Health Care sector lower today making it today's featured Health Care laggard. The sector as a whole closed the day up 0.4%. By the end of trading, Watson Pharmaceuticals fell $4.28 (-4.9%) to $83.71 on heavy volume. Throughout the day, three million shares of Watson Pharmaceuticals exchanged hands as compared to its average daily volume of 910,200 shares. The stock ranged in price between $83.50-$87.03 after having opened the day at $86.82 as compared to the previous trading day's close of $87.99. Other companies within the Health Care sector that declined today were: Pro-Dex ( PDEX), down 12.4%, Arqule ( ARQL), down 11.6%, Regulus Therapeutics ( RGLS), down 9.2%, and ARCA biopharma ( ABIO), down 9.1%.
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Watson Pharmaceuticals, Inc., a specialty pharmaceutical company, engages in the development, manufacture, marketing, sale, and distribution of generic and brand pharmaceutical products in the United States, western Europe, Canada, Australasia, Asia, South America, and South Africa. Watson Pharmaceuticals has a market cap of $11.17 billion and is part of the drugs industry. The company has a P/E ratio of 67.8, above the S&P 500 P/E ratio of 17.7. Shares are up 2.3% year to date as of the close of trading on Thursday. Currently there are 15 analysts that rate Watson Pharmaceuticals a buy, no analysts rate it a sell, and four rate it a hold.

TheStreet Ratings rates Watson Pharmaceuticals as a buy. The company's strengths can be seen in multiple areas, such as its robust revenue growth, growth in earnings per share, increase in net income, good cash flow from operations and solid stock price performance. We feel these strengths outweigh the fact that the company has had somewhat disappointing return on equity.

On the positive front, Telik ( TELK), up 105.5%, iBio ( IBIO), up 29.5%, Dendreon ( DNDN), up 21%, and Alpha Pro Tech ( APT), up 20.5%, were all gainers within the health care sector with Herbalife ( HLF) being today's featured health care sector leader.

For investors not wanting singular stock exposure, ETFs may be of interest. Investors who are bullish on the health care sector could consider Health Care Select Sector SPDR ( XLV) while those bearish on the health care sector could consider ProShares Ultra Short Health Care ( RXD).

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