Why Oculus Innovative Sciences (OCLS) Stock Is Up Today

NEW YORK (TheStreet) -- Facebook's  (FB) recently-announced acquisition of the privately-held Oculus VR, which makes virtual-reality gaming headsets called Oculus Rift, provided a major boost to Oculus VisionTech (OTVZ) and Oculus Innovative Sciences  (OCLS) on Wednesday thanks to a case of mistaken identity.

Shares of Oculus VisionTech, a small Vancouver-based company with a market cap of less than $2 million, more than doubled to a one-year high of 41 cents as investors pounced on the wrong Oculus company. Oculus VisionTech's work involves watermarking videos and other digital media to help prevent piracy. The company issued a press release about the mistake by late morning and the stock returned to its previous levels.

Oculus Innovative, which had posted five straight days of losses, also spiked in early morning trading to a high of $5.20 before it leveled off in the late morning. Oculus Innovative sells medical products such as an itch relief gel. 

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TheStreet Ratings team rates OCULUS INNOVATIVE SCIENCES as a "sell" with a ratings score of D-. TheStreet Ratings Team has this to say about their recommendation:

"We rate OCULUS INNOVATIVE SCIENCES (OCLS) a SELL. This is driven by multiple weaknesses, 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 area that we feel has been the company's primary weakness has been its declining revenues."

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

  • The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Pharmaceuticals industry and the overall market, OCULUS INNOVATIVE SCIENCES's return on equity significantly trails that of both the industry average and the S&P 500.
  • The gross profit margin for OCULUS INNOVATIVE SCIENCES is rather high; currently it is at 66.32%. Regardless of OCLS's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, OCLS's net profit margin of -18.55% significantly underperformed when compared to the industry average.
  • OCLS, with its decline in revenue, slightly underperformed the industry average of 1.3%. Since the same quarter one year prior, revenues slightly dropped by 7.0%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
  • OCLS's debt-to-equity ratio is very low at 0.01 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.23, which illustrates the ability to avoid short-term cash problems.
  • This stock has increased by 94.77% over the past year, outperforming the rise in the S&P 500 Index during the same period. Regarding the future course of this stock, we feel that the risks involved in investing in OCLS do not compensate for any future upside potential, despite the fact that it has seen nice gains over the past 12 months.
  • You can view the full analysis from the report here: OCLS Ratings Report

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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.

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