Why Dendreon (DNDN) Stock Is Down Today

NEW YORK (TheStreet) -- Shares of Dendreon Corp. (DNDN) are down -6.73% to $1.94, still reeling after the biotechnology company reported 2014 first quarter results yesterday that showed net product revenue for the quarter was $68.8 million compared to $67.6 million in the first quarter of 2013.

Net loss in the quarter was $36.4 million, or 24 cents, compared to a net loss of $72.0 million, or 48 cents per share for the same period in 2013. 

The company has been downgraded at several firms recently.

Maxim Group downgraded the company to "hold" from "buy," and set a $1 price target on shares. Roth Capital cut their price target on the shares to $1.00 from $2.60. Previously, Zacks reiterated a "neutral" rating with a $2.75 price target.

The company continues to face a significant debt issue.

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TheStreet Ratings team rates DENDREON CORP as a Sell with a ratings score of D-. TheStreet Ratings Team has this to say about their recommendation:

"We rate DENDREON CORP (DNDN) a SELL. This is driven by several 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 company's weaknesses can be seen in multiple areas, such as its unimpressive growth in net income and generally disappointing historical performance in the stock itself."

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

  • 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 129.3% when compared to the same quarter one year ago, falling from -$38.70 million to -$88.74 million.
  • Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 45.56%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 123.07% compared to the year-earlier quarter. Naturally, the overall market trend is bound to be a significant factor. However, in one sense, the stock's sharp decline last year is a positive for future investors, making it cheaper (in proportion to its earnings over the past year) than most other stocks in its industry. But due to other concerns, we feel the stock is still not a good buy right now.
  • The revenue fell significantly faster than the industry average of 28.0%. Since the same quarter one year prior, revenues fell by 12.5%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • DENDREON CORP 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, DENDREON CORP continued to lose money by earning -$1.95 versus -$2.65 in the prior year. This year, the market expects an improvement in earnings (-$0.84 versus -$1.95).
  • The gross profit margin for DENDREON CORP is rather high; currently it is at 57.94%. 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 -118.58% is in-line with the industry average.
  • You can view the full analysis from the report here: DNDN Ratings Report

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