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 0.3% versus the S&P 500, which was unchanged. Laggards within the Health Care sector included Allied Healthcare Products ( AHPI), down 3.9%, VirtualScopics ( VSCP), down 4.8%, Natural Alternatives International ( NAII), down 2.0%, Merus Labs International ( MSLI), down 2.5% and NephroGenex ( NRX), down 3.7%.

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

Merus Labs International ( MSLI) is one of the companies that pushed the Health Care sector lower today. Merus Labs International was down $0.06 (2.5%) to $2.33 on heavy volume. Throughout the day, 53,756 shares of Merus Labs International exchanged hands as compared to its average daily volume of 29,400 shares. The stock ranged in price between $2.21-$2.36 after having opened the day at $2.28 as compared to the previous trading day's close of $2.39.

Merus Labs International Inc., a specialty pharmaceutical company, is engaged in the acquisition and licensing of branded prescription medicines in the United States, Canada, and Europe. Merus Labs International has a market cap of $114.2 million and is part of the health services industry. Shares are up 67.4% year-to-date as of the close of trading on Tuesday.

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

Highlights from TheStreet Ratings analysis on MSLI go as follows:

  • Net operating cash flow has decreased to $2.93 million or 29.74% when compared to the same quarter last year. In addition, when comparing the cash generation rate to the industry average, the firm's growth is significantly lower.
  • The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. Compared to other companies in the Pharmaceuticals industry and the overall market, MERUS LABS INTERNATIONAL INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • The gross profit margin for MERUS LABS INTERNATIONAL INC is currently very high, coming in at 81.89%. Despite the high profit margin, it has decreased significantly from the same period last year. Despite the mixed results of the gross profit margin, MSLI's net profit margin of -21.74% significantly underperformed when compared to the industry average.
  • MERUS LABS INTERNATIONAL INC has improved earnings per share by 42.9% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past year. During the past fiscal year, MERUS LABS INTERNATIONAL INC continued to lose money by earning -$0.05 versus -$0.70 in the prior year.
  • The net income growth from the same quarter one year ago has exceeded that of the S&P 500 and greatly outperformed compared to the Pharmaceuticals industry average. The net income increased by 36.7% when compared to the same quarter one year prior, rising from -$2.30 million to -$1.46 million.

You can view the full analysis from the report here: Merus Labs International Ratings Report

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At the close, VirtualScopics ( VSCP) was down $0.22 (4.8%) to $4.36 on light volume. Throughout the day, 1,684 shares of VirtualScopics exchanged hands as compared to its average daily volume of 7,000 shares. The stock ranged in price between $4.23-$4.64 after having opened the day at $4.64 as compared to the previous trading day's close of $4.58.

VirtualScopics, Inc. provides imaging solutions for the pharmaceutical, biotechnology, and medical device industries. VirtualScopics has a market cap of $14.0 million and is part of the health services industry. Shares are up 32.4% year-to-date as of the close of trading on Tuesday. 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 18.8%. 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.
  • VIRTUALSCOPICS INC has improved earnings per share by 42.5% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past year. During the past fiscal year, VIRTUALSCOPICS INC continued to lose money by earning -$1.02 versus -$1.10 in the prior year.

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

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Allied Healthcare Products ( AHPI) was another company that pushed the Health Care sector lower today. Allied Healthcare Products was down $0.10 (3.9%) to $2.46 on heavy volume. Throughout the day, 10,087 shares of Allied Healthcare Products exchanged hands as compared to its average daily volume of 4,400 shares. The stock ranged in price between $2.31-$2.57 after having opened the day at $2.57 as compared to the previous trading day's close of $2.56.

Allied Healthcare Products, Inc. manufactures, markets, and distributes respiratory care products, medical gas equipment, and emergency medical products in Canada, Mexico, Central and South America, Europe, the Middle East, and the Far East. Allied Healthcare Products has a market cap of $19.4 million and is part of the health services industry. Shares are up 12.3% year-to-date as of the close of trading on Tuesday.

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

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Highlights from TheStreet Ratings analysis on AHPI go as follows:

  • ALLIED HEALTHCARE PRODS 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. During the past fiscal year, ALLIED HEALTHCARE PRODS INC reported poor results of -$0.15 versus -$0.06 in the prior year.
  • 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 247.3% when compared to the same quarter one year ago, falling from -$0.28 million to -$0.97 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, ALLIED HEALTHCARE PRODS INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • The gross profit margin for ALLIED HEALTHCARE PRODS INC is rather low; currently it is at 22.80%. Regardless of AHPI's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, AHPI's net profit margin of -10.63% significantly underperformed when compared to the industry average.
  • The share price of ALLIED HEALTHCARE PRODS INC has not done very well: it is down 8.33% 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.

You can view the full analysis from the report here: Allied Healthcare Products 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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