Will This Downgrade Hurt Endologix (ELGX) Today?

NEW YORK (TheStreet) -- Oppenheimer downgraded Endologix  (ELGX) to "perform" from "outperform" and set a $16 target price. The firm noted domestic business is facing increased competition. 

The stock was plunging 27.25% to $13 shortly after the market opened on Friday.

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Separately, TheStreet Ratings team rates ENDOLOGIX INC as a "sell" with a ratings score of D+. TheStreet Ratings Team has this to say about their recommendation:

"We rate ENDOLOGIX INC (ELGX) a SELL. This is driven by some concerns, 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 unimpressive growth in net income and feeble growth in its earnings per share."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • 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 Equipment & Supplies industry. The net income has significantly decreased by 55.5% when compared to the same quarter one year ago, falling from -$5.78 million to -$8.99 million.
  • ENDOLOGIX INC's earnings per share declined by 40.0% in the most recent quarter compared to the same quarter a year ago. The company has reported a trend of declining earnings per share over the past two years. However, the consensus estimate suggests that this trend should reverse in the coming year. During the past fiscal year, ENDOLOGIX INC reported poor results of -$0.61 versus -$0.51 in the prior year. This year, the market expects an improvement in earnings (-$0.14 versus -$0.61).
  • The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. Compared to other companies in the Health Care Equipment & Supplies industry and the overall market, ENDOLOGIX INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • Compared to where it was 12 months ago, the stock is up, but it has so far lagged the appreciation in the S&P 500. Turning our attention to the future direction of the stock, we do not believe this stock offers ample reward opportunity to compensate for the risks, despite the fact that it rose over the past year.
  • The gross profit margin for ENDOLOGIX INC is currently very high, coming in at 79.52%. 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 -27.02% is in-line with the industry average.
  • You can view the full analysis from the report here: ELGX Ratings Report

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