3 Stocks Pushing The Health Care Sector Lower

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.

The Health Care sector as a whole closed the day up 0.8% versus the S&P 500, which was up 0.4%. Laggards within the Health Care sector included VirtualScopics ( VSCP), down 2.6%, Electromed ( ELMD), down 2.7%, SunLink Health Systems ( SSY), down 4.9%, Can Fite Biofarma ( CANF), down 3.8% and Semler Scientific ( SMLR), down 8.0%.

TheStreet Ratings Group would like to highlight 3 stocks that pushed the sector lower today:

Can Fite Biofarma ( CANF) is one of the companies that pushed the Health Care sector lower today. Can Fite Biofarma was down $0.16 (3.8%) to $4.15 on light volume. Throughout the day, 15,053 shares of Can Fite Biofarma exchanged hands as compared to its average daily volume of 21,200 shares. The stock ranged in price between $4.14-$4.32 after having opened the day at $4.32 as compared to the previous trading day's close of $4.32.

Can Fite Biofarma has a market cap of $33.5 million and is part of the health services industry. Shares are down 28.9% year-to-date as of the close of trading on Friday. Currently there is 1 analyst who rates Can Fite Biofarma a buy, no analysts rate it a sell, and none rate it a hold.

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At the close, Electromed ( ELMD) was down $0.03 (2.7%) to $1.07 on average volume. Throughout the day, 24,559 shares of Electromed exchanged hands as compared to its average daily volume of 27,600 shares. The stock ranged in price between $1.03-$1.08 after having opened the day at $1.04 as compared to the previous trading day's close of $1.10.

Electromed, Inc. develops, manufactures, markets, and sells airway clearance therapy products. Electromed has a market cap of $8.7 million and is part of the health services industry. Shares are down 68.5% year-to-date as of the close of trading on Friday. Currently there is 1 analyst who rates Electromed a buy, no analysts rate it a sell, and none rate it a hold.

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TheStreet Ratings rates Electromed as a sell. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income, disappointing return on equity, generally disappointing historical performance in the stock itself and feeble growth in its earnings per share.

Highlights from TheStreet Ratings analysis on ELMD go 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 Health Care Equipment & Supplies industry. The net income has significantly decreased by 132.9% when compared to the same quarter one year ago, falling from -$0.43 million to -$1.00 million.
  • Current return on equity is lower than its ROE from the same quarter one year prior. This is a clear sign of weakness within the company. Compared to other companies in the Health Care Equipment & Supplies industry and the overall market, ELECTROMED INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • The share price of ELECTROMED INC has not done very well: it is down 13.71% and has underperformed the S&P 500, in part reflecting the company's sharply declining earnings per share when compared to the year-earlier quarter. The fact that the stock is now selling for less than others in its industry in relation to its current earnings is not reason enough to justify a buy rating at this time.
  • ELECTROMED 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. The company has reported a trend of declining earnings per share over the past two years. However, the consensus estimate suggests that this trend should reverse in the coming year. During the past fiscal year, ELECTROMED INC swung to a loss, reporting -$0.16 versus $0.02 in the prior year. This year, the market expects an improvement in earnings (-$0.07 versus -$0.16).
  • The gross profit margin for ELECTROMED INC is rather high; currently it is at 68.31%. Despite the high profit margin, it has decreased significantly from the same period last year. Despite the mixed results of the gross profit margin, ELMD's net profit margin of -25.37% significantly underperformed when compared to the industry average.

You can view the full analysis from the report here: Electromed Ratings Report

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VirtualScopics ( VSCP) was another company that pushed the Health Care sector lower today. VirtualScopics was down $0.10 (2.6%) to $3.85 on light volume. Throughout the day, 2,820 shares of VirtualScopics exchanged hands as compared to its average daily volume of 4,300 shares. The stock ranged in price between $3.78-$3.91 after having opened the day at $3.91 as compared to the previous trading day's close of $3.95.

VirtualScopics, Inc. provides imaging solutions for the pharmaceutical, biotechnology, and medical device industries. VirtualScopics has a market cap of $11.6 million and is part of the health services industry. Shares are up 14.3% year-to-date as of the close of trading on Friday. Currently there is 1 analyst who rates VirtualScopics a buy, no analysts rate it a sell, and none rate it a hold.

TheStreet Ratings rates VirtualScopics as a sell. The company's weaknesses can be seen in multiple areas, such as its poor profit margins and generally disappointing historical performance in the stock itself.

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Highlights from TheStreet Ratings analysis on VSCP go as follows:

  • The gross profit margin for VIRTUALSCOPICS INC is currently lower than what is desirable, coming in at 32.24%. Regardless of VSCP's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, VSCP's net profit margin of -27.44% significantly underperformed when compared to the industry average.
  • VSCP's stock share price has done very poorly compared to where it was a year ago: Despite any rallies, the net result is that it is down by 35.33%, which is also worse that the performance of the S&P 500 Index. Investors have so far failed to pay much attention to the earnings improvements the company has managed to achieve over the last 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.
  • Current return on equity exceeded its ROE from the same quarter one year prior. This is a clear sign of strength within the company. Compared to other companies in the Life Sciences Tools & Services industry and the overall market, VIRTUALSCOPICS INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • VSCP, with its decline in revenue, underperformed when compared the industry average of 20.0%. Since the same quarter one year prior, revenues slightly dropped by 7.1%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
  • The net income growth from the same quarter one year ago has exceeded that of the S&P 500, but is less than that of the Life Sciences Tools & Services industry average. The net income increased by 42.0% when compared to the same quarter one year prior, rising from -$1.11 million to -$0.65 million.

You can view the full analysis from the report here: VirtualScopics Ratings Report

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

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