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) -- Vertex Pharmaceuticals (Nasdaq: VRTX) 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, poor profit margins and disappointing return on equity.
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- VERTEX 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 year. We anticipate that this should continue in the coming year. During the past fiscal year, VERTEX PHARMACEUTICALS INC swung to a loss, reporting -$0.50 versus $0.04 in the prior year. For the next year, the market is expecting a contraction of 48.0% in earnings (-$0.74 versus -$0.50).
- 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 148.0% when compared to the same quarter one year ago, falling from $158.63 million to -$76.15 million.
- The gross profit margin for VERTEX PHARMACEUTICALS INC is currently lower than what is desirable, coming in at 26.50%. It has decreased significantly from the same period last year. Along with this, the net profit margin of -22.79% is significantly below that of the industry average.
- 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, VERTEX PHARMACEUTICALS 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.
- The revenue fell significantly faster than the industry average of 2.9%. Since the same quarter one year prior, revenues fell by 40.7%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
-- Written by a member of TheStreet Ratings Staff