Emergent BioSolutions Incorporated Stock Downgraded (EBS)

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) -- Emergent BioSolutions Incorporated (NYSE: EBS) has been downgraded by TheStreet Ratings from buy to hold. The company's strengths can be seen in multiple areas, such as its largely solid financial position with reasonable debt levels by most measures, attractive valuation levels and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including unimpressive growth in net income, disappointing return on equity and weak operating cash flow.

  • EXCLUSIVE OFFER: Jim Cramer's Protégé, Dave Peltier, only buys Stocks Under $10 that he thinks could potentially double. See what he's trading today with a 14-day FREE pass.

Highlights from the ratings report include:
  • EBS's debt-to-equity ratio is very low at 0.14 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Along with this, the company maintains a quick ratio of 3.84, which clearly demonstrates the ability to cover short-term cash needs.
  • EMERGENT BIOSOLUTIONS INC's earnings per share declined by 43.6% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, EMERGENT BIOSOLUTIONS INC increased its bottom line by earning $0.64 versus $0.60 in the prior year. This year, the market expects an improvement in earnings ($0.72 versus $0.64).
  • Net operating cash flow has significantly decreased to -$41.99 million or 208.87% 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 has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. In comparison to the other companies in the Biotechnology industry and the overall market, EMERGENT BIOSOLUTIONS INC's return on equity is significantly below that of the industry average and is below that of the S&P 500.
.

Emergent BioSolutions, Inc., a specialty pharmaceutical company, engages in the development, manufacture, and commercialization of vaccines and therapeutics for use in defense and commercial markets to healthcare providers and purchasers in the United States and internationally. The company has a P/E ratio of 22.3, above the S&P 500 P/E ratio of 17.7. Emergent BioSolutions has a market cap of $521.3 million and is part of the health care sector and drugs industry. Shares are down 10.4% year to date as of the close of trading on Wednesday.

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

-- Written by a member of TheStreet Ratings Staff

It's Official: Action Alerts PLUS beats the S&P 500 with Dividends Reinvested! Cramer and Link were up 16.72% in 2012. Were you? See what they are trading for 14-days FREE.

null

More from Markets

Global Stocks Rally as US-China Trade War Thaws; Dow Could Test 25,000

Global Stocks Rally as US-China Trade War Thaws; Dow Could Test 25,000

GE Confirms $11.1 Billion Transportation Merger With Wabtec

GE Confirms $11.1 Billion Transportation Merger With Wabtec

China Trade Truce, General Electric and Tesla - 5 Things You Must Know

China Trade Truce, General Electric and Tesla - 5 Things You Must Know

GE Shares Gain Amid Reports of $20 Billion Wabtec Deal

GE Shares Gain Amid Reports of $20 Billion Wabtec Deal

Listen: Here's What You Need To Know About ETFs Today (Hint: They're on Fire!)

Listen: Here's What You Need To Know About ETFs Today (Hint: They're on Fire!)