Why Zeltiq Aesthetics (ZLTQ) Stock Is Falling Today

Editor's Note: This article was corrected to reflect the company's first quarter results, analysts earnings and revenue consensus estimates and updated stock information

NEW YORK (TheStreet) -- Zeltiq Aesthetics (ZLTQ) shares are down -2% to $17.92 today following the release of the company's first quarter earnings report. 

The medical device equipment development company posted revenue of $31 million, beating analysts estimates of $27.9 million.

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However, the company reported a net loss for the quarter of -$7.3 million, or -20 cents per diluted share, missing analysts estimates by 5 cents.

TheStreet Ratings team rates ZELTIQ AESTHETICS INC as a Sell with a ratings score of D+. TheStreet Ratings Team has this to say about their recommendation:

"We rate ZELTIQ AESTHETICS INC (ZLTQ) 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 area that we feel has been the company's primary weakness has been its disappointing return on equity."

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

  • 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, ZELTIQ AESTHETICS INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • The gross profit margin for ZELTIQ AESTHETICS INC is currently very high, coming in at 71.34%. 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 -15.08% is in-line with the industry average.
  • Net operating cash flow has significantly increased by 86.13% to -$1.12 million when compared to the same quarter last year. In addition, ZELTIQ AESTHETICS INC has also vastly surpassed the industry average cash flow growth rate of -15.11%.
  • ZLTQ 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, ZLTQ has a quick ratio of 2.18, which demonstrates the ability of the company to cover short-term liquidity needs.
  • Investors have driven up the company's shares by 319.91% over the past year, a rise that has exceeded that of the S&P 500 Index. Regarding the future course of this stock, we feel that the risks involved in investing in ZLTQ 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: ZLTQ Ratings Report
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