NEW YORK (TheStreet) -- BG Medicine (BGMD) was rising 26.97% to $1.46 on Tuesday after the diagnostics company published results of a clinical research study that validated the performance of the VIDAS Galectin-3, an automated assay developed by bioMerieux.
The results, which were posted online prior to its print publication in the journal Clinica Chimica Acta, noted that elevated galectin-3 levels in blood samples that had been previously collected and then measured with the VIDAS Galectin-3 assay largely predicted fatal cardiovascular events. The assay also significantly predicted the severity of heart failure in the 137 tested patients, all of whom had been diagnosed with chronic heart failure.
TheStreet Ratings team rates BG MEDICINE INC as a "sell" with a ratings score of D-. TheStreet Ratings Team has this to say about their recommendation:
"We rate BG MEDICINE INC (BGMD) a SELL. This is driven by several weaknesses, which we believe should have a greater impact than any strengths, and could make it more difficult for investors to achieve positive results compared to most of the stocks we cover. The company's weaknesses can be seen in multiple areas, such as its disappointing return on equity, generally disappointing historical performance in the stock itself and generally high debt management risk."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- 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 Life Sciences Tools & Services industry and the overall market, BG MEDICINE 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 13.75 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. Even though the debt-to-equity ratio is weak, BGMD's quick ratio is somewhat strong at 1.36, demonstrating the ability to handle short-term liquidity needs.
- BGMD's stock share price has done very poorly compared to where it was a year ago: Despite any rallies, the net result is that it is down by 45.22%, which is also worse that the performance of the S&P 500 Index. Investors have so far failed to pay much attention to the earnings improvements the company has managed to achieve over the last quarter. Naturally, the overall market trend is bound to be a significant factor. However, in one sense, the stock's sharp decline last year is a positive for future investors, making it cheaper (in proportion to its earnings over the past year) than most other stocks in its industry. But due to other concerns, we feel the stock is still not a good buy right now.
- BG MEDICINE INC reported significant earnings per share improvement 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, BG MEDICINE INC reported poor results of -$1.18 versus -$0.90 in the prior year. This year, the market expects an improvement in earnings (-$0.63 versus -$1.18).
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Life Sciences Tools & Services industry. The net income increased by 46.2% when compared to the same quarter one year prior, rising from -$6.81 million to -$3.67 million.
- You can view the full analysis from the report here: BGMD Ratings Report