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 down 0.9% versus the S&P 500, which was down 0.7%. Laggards within the Health Care sector included ImmuCell ( ICCC), down 3.0%, Aoxing Pharmaceutical ( AXN), down 2.5%, SunLink Health Systems ( SSY), down 1.6%, VirtualScopics ( VSCP), down 5.0% and American Shared Hospital Services ( AMS), down 1.5%.

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

Smith & Nephew ( SNN) is one of the companies that pushed the Health Care sector lower today. Smith & Nephew was down $2.33 (2.6%) to $88.58 on average volume. Throughout the day, 281,388 shares of Smith & Nephew exchanged hands as compared to its average daily volume of 229,300 shares. The stock ranged in price between $87.77-$89.60 after having opened the day at $89.47 as compared to the previous trading day's close of $90.91.

Smith & Nephew plc develops, manufactures, markets, and sells medical devices in the advanced surgical devices and advanced wound management sectors worldwide. Smith & Nephew has a market cap of $16.5 billion and is part of the health services industry. Shares are up 26.7% year-to-date as of the close of trading on Monday. Currently there are 5 analysts who rate Smith & Nephew a buy, no analysts rate it a sell, and 3 rate it a hold.

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TheStreet Ratings rates Smith & Nephew as a buy. The company's strengths can be seen in multiple areas, such as its solid stock price performance, increase in net income, largely solid financial position with reasonable debt levels by most measures, expanding profit margins and growth in earnings per share. We feel these strengths outweigh the fact that the company has had somewhat disappointing return on equity.

Highlights from TheStreet Ratings analysis on SNN go as follows:

  • Investors have apparently begun to recognize positive factors similar to those we have mentioned in this report, including earnings growth. This has helped drive up the company's shares by a sharp 55.94% over the past year, a rise that has exceeded that of the S&P 500 Index. Regarding the stock's future course, although almost any stock can fall in a broad market decline, SNN should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
  • The net income growth from the same quarter one year ago has significantly exceeded that of the Health Care Equipment & Supplies industry average, but is less than that of the S&P 500. The net income increased by 4.9% when compared to the same quarter one year prior, going from $143.00 million to $150.00 million.
  • SNN's debt-to-equity ratio is very low at 0.09 and is currently below that of the industry average, implying that there has been very successful management of debt levels.
  • The gross profit margin for SMITH & NEPHEW PLC is currently very high, coming in at 83.88%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 13.97% is above that of the industry average.
  • SMITH & NEPHEW PLC has improved earnings per share by 6.3% 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, SMITH & NEPHEW PLC reported lower earnings of $3.08 versus $4.02 in the prior year. This year, the market expects an improvement in earnings ($4.12 versus $3.08).

You can view the full analysis from the report here: Smith & Nephew Ratings Report

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At the close, VirtualScopics ( VSCP) was down $0.25 (5.0%) to $4.75 on heavy volume. Throughout the day, 16,831 shares of VirtualScopics exchanged hands as compared to its average daily volume of 5,800 shares. The stock ranged in price between $4.50-$4.80 after having opened the day at $4.50 as compared to the previous trading day's close of $5.00.

VirtualScopics, Inc. provides imaging solutions for the pharmaceutical, biotechnology, and medical device industries. VirtualScopics has a market cap of $16.2 million and is part of the health services industry. Shares are up 44.5% year-to-date as of the close of trading on Monday. Currently there is 1 analyst who rates VirtualScopics a buy, no analysts rate it a sell, and none rate it a hold.

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TheStreet Ratings rates VirtualScopics as a sell. Among the areas we feel are negative, one of the most important has been poor profit margins.

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.
  • 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 18.7%. 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.
  • Compared to where it was 12 months ago, the stock is up, but it has so far lagged the appreciation in the S&P 500. Turning our attention to the future direction of the stock, we do not believe this stock offers ample reward opportunity to compensate for the risks, despite the fact that it rose over the past year.
  • 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.

Aoxing Pharmaceutical ( AXN) was another company that pushed the Health Care sector lower today. Aoxing Pharmaceutical was down $0.01 (2.5%) to $0.39 on light volume. Throughout the day, 4,955 shares of Aoxing Pharmaceutical exchanged hands as compared to its average daily volume of 39,800 shares. The stock ranged in price between $0.39-$0.39 after having opened the day at $0.39 as compared to the previous trading day's close of $0.40.

Aoxing Pharmaceutical Company, Inc., a specialty pharmaceutical company, researches, develops, manufactures, and distributes various narcotic, pain-management, and addiction treatment pharmaceutical products primarily in the People's Republic of China. Aoxing Pharmaceutical has a market cap of $16.5 million and is part of the health services industry. Shares are up 60.3% year-to-date as of the close of trading on Monday.

TheStreet Ratings rates Aoxing Pharmaceutical as a sell. Among the areas we feel are negative, one of the most important has been weak operating cash flow.

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Highlights from TheStreet Ratings analysis on AXN go as follows:

  • Net operating cash flow has decreased to -$4.35 million or 41.91% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
  • AOXING PHARMACEUTICAL CO INC has improved earnings per share by 20.0% in the most recent quarter compared to the same quarter a year ago. This company has not demonstrated a clear trend in earnings over the past 2 years, making it difficult to accurately predict earnings for the coming year. During the past fiscal year, AOXING PHARMACEUTICAL CO INC reported poor results of -$0.34 versus -$0.32 in the prior year.
  • 43.50% is the gross profit margin for AOXING PHARMACEUTICAL CO INC which we consider to be strong. Despite the high profit margin, it has decreased significantly from the same period last year. Despite the mixed results of the gross profit margin, AXN's net profit margin of -74.48% significantly underperformed when compared to the industry average.
  • Investors have driven up the company's shares by 50.66% 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 AXN do not compensate for any future upside potential, despite the fact that it has seen nice gains over the past 12 months.
  • The net income growth from the same quarter one year ago has significantly exceeded that of the Pharmaceuticals industry average, but is less than that of the S&P 500. The net income increased by 29.8% when compared to the same quarter one year prior, rising from -$2.60 million to -$1.82 million.

You can view the full analysis from the report here: Aoxing Pharmaceutical 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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