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) -- BioDelivery Sciences International (Nasdaq: BDSI) has been downgraded by TheStreet Ratings from hold to sell. The company's weaknesses can be seen in multiple areas, such as its disappointing return on equity and poor profit margins.
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- Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Pharmaceuticals industry and the overall market, BIODELIVERY SCIENCES INTL's return on equity significantly trails that of both the industry average and the S&P 500.
- The gross profit margin for BIODELIVERY SCIENCES INTL is currently extremely low, coming in at 5.05%. Despite the low profit margin, it has increased significantly from the same period last year. Despite the mixed results of the gross profit margin, BDSI's net profit margin of -22.44% significantly underperformed when compared to the industry average.
- BIODELIVERY SCIENCES INTL reported significant earnings per share improvement in the most recent quarter compared to 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, BIODELIVERY SCIENCES INTL reported poor results of -$1.51 versus -$0.04 in the prior year. This year, the market expects an improvement in earnings (-$0.65 versus -$1.51).
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Pharmaceuticals industry. The net income increased by 63.5% when compared to the same quarter one year prior, rising from -$12.72 million to -$4.64 million.
- This stock has increased by 115.40% 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 BDSI do not compensate for any future upside potential, despite the fact that it has seen nice gains over the past 12 months.