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) -- POZEN (Nasdaq: POZN) has been downgraded by TheStreet Ratings from hold to sell. Among the areas we feel are negative, one of the most important has been an overall disappointing return on equity.
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- 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 Pharmaceuticals industry and the overall market, POZEN INC's return on equity significantly trails that of both the industry average and the S&P 500.
- POZN has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign. To add to this, POZN has a quick ratio of 1.97, which demonstrates the ability of the company to cover short-term liquidity needs.
- Compared to where it was a year ago today, the stock is now trading at a higher level, and has traded in line with 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.
- POZEN INC reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past year. We feel that this trend should continue. This trend suggests that the performance of the business is improving. During the past fiscal year, POZEN INC continued to lose money by earning -$0.55 versus -$0.84 in the prior year. This year, the market expects an improvement in earnings ($0.83 versus -$0.55).
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Pharmaceuticals industry. The net income increased by 64.3% when compared to the same quarter one year prior, rising from -$6.09 million to -$2.18 million.