Auxilium Pharmaceuticals Inc. Stock Upgraded (AUXL)

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) -- Auxilium Pharmaceuticals (Nasdaq: AUXL) has been upgraded by TheStreet Ratings from sell to hold. The company's strengths can be seen in multiple areas, such as its robust revenue growth, largely solid financial position with reasonable debt levels by most measures and notable return on equity. However, as a counter to these strengths, we also find weaknesses including weak operating cash flow and a generally disappointing performance in the stock itself.

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Highlights from the ratings report include:
  • AUXL's very impressive revenue growth greatly exceeded the industry average of 7.0%. Since the same quarter one year prior, revenues leaped by 135.3%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • AUXL has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign. To add to this, AUXL has a quick ratio of 2.21, which demonstrates the ability of the company to cover short-term liquidity needs.
  • AUXILIUM PHARMA INC reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. However, we anticipate underperformance relative to this pattern in the coming year. During the past fiscal year, AUXILIUM PHARMA INC turned its bottom line around by earning $1.74 versus -$0.69 in the prior year. For the next year, the market is expecting a contraction of 109.2% in earnings (-$0.16 versus $1.74).
  • AUXL has underperformed the S&P 500 Index, declining 6.24% from its price level of one year ago. The fact that the stock is now selling for less than others in its industry in relation to its current earnings is not reason enough to justify a buy rating at this time.
  • Net operating cash flow has significantly decreased to -$13.61 million or 396.08% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
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Auxilium Pharmaceuticals, Inc., a specialty biopharmaceutical company, together with its subsidiaries, develops and markets pharmaceutical products worldwide. The company has a P/E ratio of 9.7, below the S&P 500 P/E ratio of 17.7. Auxilium has a market cap of $844.8 million and is part of the health care sector and drugs industry. Shares are down 8.6% year to date as of the close of trading on Thursday.

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

-- Written by a member of TheStreet Ratings Staff

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.

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