Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link. NEW YORK ( TheStreet) -- Medidata Solutions (Nasdaq: MDSO) has been downgraded by TheStreet Ratings from buy to hold. The company's strengths can be seen in multiple areas, such as its robust revenue growth, solid stock price performance and good cash flow from operations. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, disappointing return on equity and generally higher debt management risk.
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- The revenue growth came in higher than the industry average of 7.4%. Since the same quarter one year prior, revenues rose by 27.2%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
- Compared to its closing price of one year ago, MDSO's share price has jumped by 125.59%, exceeding the performance of the broader market during that same time frame. Regarding the stock's future course, our hold rating indicates that we do not recommend additional investment in this stock despite its gains in the past year.
- The gross profit margin for MEDIDATA SOLUTIONS INC is currently very high, coming in at 77.81%. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of 0.78% trails the industry average.
- Current return on equity is lower than its ROE from the same quarter one year prior. This is a clear sign of weakness within the company. When compared to other companies in the Health Care Technology industry and the overall market, MEDIDATA SOLUTIONS INC's return on equity is below that of both the industry average and the S&P 500.
- 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 Health Care Technology industry. The net income has significantly decreased by 91.2% when compared to the same quarter one year ago, falling from $6.59 million to $0.58 million.