NEW YORK (TheStreet) -- Horizon Pharma (HZNP) was rising 18.82% to $10.10 in afternoon trading on Wednesday after the pharmaceutical company announced its preliminary results for the fourth quarter and fiscal year 2013.
The company expects total net revenues to be between $31.9 million and $32.4 million for the fourth quarter and between $79.5 million and $80 million for the fiscal year. The company also provided an update on the status of its osteoarthritis drug VIMOVO and announced that all required FDA transfers, including the New Drug Application (NDA) and Investigational New Drug (IND), have been completed. Furthermore, Horizon-labeled inventory "has been manufactured, shipped and sold into the wholesale and pharmacy channel," according to the company's statement.
TheStreet Ratings team rates HORIZON PHARMA INC as a "sell" with a ratings score of D-. TheStreet Ratings Team has this to say about their recommendation:
"We rate HORIZON PHARMA INC (HZNP) a SELL. This is driven by multiple 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 area that we feel has been the company's primary weakness has been its disappointing return on equity."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- Current return on equity exceeded its ROE from the same quarter one year prior. This is a clear sign of strength within the company. Compared to other companies in the Pharmaceuticals industry and the overall market, HORIZON PHARMA INC's return on equity significantly trails that of both the industry average and the S&P 500.
- The gross profit margin for HORIZON PHARMA INC is currently very high, coming in at 87.30%. It has increased significantly from the same period last year. Regardless of the strong results of the gross profit margin, the net profit margin of -20.94% is in-line with the industry average.
- Net operating cash flow has significantly increased by 58.63% to -$9.44 million when compared to the same quarter last year. In addition, HORIZON PHARMA INC has also vastly surpassed the industry average cash flow growth rate of -11.51%.
- The debt-to-equity ratio is somewhat low, currently at 0.65, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels. To add to this, HZNP has a quick ratio of 1.67, which demonstrates the ability of the company to cover short-term liquidity needs.
- This stock has increased by 258.89% over the past year, outperforming the rise in the S&P 500 Index during the same period. Regarding the future course of this stock, we feel that the risks involved in investing in HZNP do not compensate for any future upside potential, despite the fact that it has seen nice gains over the past 12 months.
- You can view the full analysis from the report here: HZNP Ratings Report