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) -- Genomic Health (Nasdaq: GHDX) 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 disappointing historical performance in the stock itself.
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- GENOMIC HEALTH INC has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. Earnings per share have declined over the last two years. We anticipate that this should continue in the coming year. During the past fiscal year, GENOMIC HEALTH INC swung to a loss, reporting -$0.41 versus $0.25 in the prior year. For the next year, the market is expecting a contraction of 107.3% in earnings (-$0.85 versus -$0.41).
- 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 578.3% when compared to the same quarter one year ago, falling from $1.96 million to -$9.37 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, GENOMIC HEALTH INC's return on equity significantly trails that of both the industry average and the S&P 500.
- The share price of GENOMIC HEALTH INC has not done very well: it is down 7.82% and has underperformed the S&P 500, in part reflecting the company's sharply declining earnings per share when compared to the year-earlier quarter. Turning toward the future, the fact that the stock has come down in price over the past year should not necessarily be interpreted as a negative; it could be one of the factors that may help make the stock attractive down the road. Right now, however, we believe that it is too soon to buy.
- The gross profit margin for GENOMIC HEALTH INC is currently very high, coming in at 84.28%. Regardless of GHDX's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, GHDX's net profit margin of -13.61% significantly underperformed when compared to the industry average.