NEW YORK (TheStreet) -- Shares of Biolase Inc. (BIOL) are up 16.76% to $2.20 after its Chairman and CEO Federico Pignatelli resigned from his roles following the Delaware Supreme Court's ruling against the company on June 12 regarding false advertising.
Jeffrey Nugent has been appointed interim CEO, while a formal search is initiated.
"We rate BIOLASE INC (BIOL) a SELL. This is driven by a few notable 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 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 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 Health Care Equipment & Supplies industry. The net income has significantly decreased by 85.7% when compared to the same quarter one year ago, falling from -$2.63 million to -$4.89 million.
- 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 Health Care Equipment & Supplies industry and the overall market, BIOLASE INC's return on equity significantly trails that of both the industry average and the S&P 500.
- Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 45.78%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 65.81% 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.
- BIOLASE 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, BIOLASE INC reported poor results of -$0.35 versus -$0.10 in the prior year. This year, the market expects an improvement in earnings (-$0.34 versus -$0.35).
- BIOL, with its decline in revenue, underperformed when compared the industry average of 3.6%. Since the same quarter one year prior, revenues fell by 21.1%. The declining revenue appears to have seeped down to the company's bottom line, decreasing earnings per share.
- You can view the full analysis from the report here: BIOL Ratings Report