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) -- Medivation (Nasdaq: MDVN) 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, disappointing return on equity and generally high debt management risk.
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- MEDIVATION 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. Stable earnings per share over the past year indicate the company has managed its earnings and share float. We anticipate this stability to falter in the coming year and, in turn, the company to deliver lower earnings per share than prior full year. During the past fiscal year, MEDIVATION INC reported poor results of -$0.56 versus -$0.56 in the prior year. For the next year, the market is expecting a contraction of 75.0% in earnings (-$0.98 versus -$0.56).
- 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 6275.0% when compared to the same quarter one year ago, falling from $0.44 million to -$27.17 million.
- 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. Compared to other companies in the Biotechnology industry and the overall market, MEDIVATION INC's return on equity significantly trails that of both the industry average and the S&P 500.
- The debt-to-equity ratio is very high at 3.52 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. Despite the company's weak debt-to-equity ratio, the company has managed to keep a very strong quick ratio of 3.39, which shows the ability to cover short-term cash needs.
- Compared to its closing price of one year ago, MDVN's share price has jumped by 37.24%, exceeding the performance of the broader market during that same time frame. Regarding the future course of this stock, we feel that the risks involved in investing in MDVN do not compensate for any future upside potential, despite the fact that it has seen nice gains over the past 12 months.
-- Written by a member of TheStreet Ratings Staff