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) -- Horizon Pharma (Nasdaq: HZNP) has been downgraded by TheStreet Ratings from hold to sell. Among the areas we feel are negative, one of the most important has been generally deteriorating net income.
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- 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 Pharmaceuticals industry. The net income has significantly decreased by 322.9% when compared to the same quarter one year ago, falling from -$24.33 million to -$102.90 million.
- HORIZON PHARMA 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. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, HORIZON PHARMA INC continued to lose money by earning -$2.29 versus -$2.53 in the prior year. This year, the market expects an improvement in earnings ($0.59 versus -$2.29).
- The gross profit margin for HORIZON PHARMA INC is currently very high, coming in at 94.07%. 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 -342.09% is in-line with the industry average.
- Net operating cash flow has increased to -$11.18 million or 34.89% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of 10.79%.
- Compared to its closing price of one year ago, HZNP's share price has jumped by 521.03%, exceeding the performance of the broader market during that same time frame. 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.