3 Health Care Stocks Driving The Sector Higher

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.

All three major indices are trading down today with the Dow Jones Industrial Average ( ^DJI) trading down 69.58 points (-0.4%) at 16,916 as of Thursday, July 10, 2014, 3:55 PM ET. The NYSE advances/declines ratio sits at 1,051 issues advancing vs. 1,940 declining with 176 unchanged.

The Health Care sector as a whole closed the day down 0.7% versus the S&P 500, which was down 0.4%. Top gainers within the Health Care sector included Aoxing Pharmaceutical ( AXN), up 3.1%, XTL Biopharmaceuticals ( XTLB), up 2.0%, VirtualScopics ( VSCP), up 4.0%, Celator Pharmaceuticals ( CPXX), up 2.1% and Can Fite Biofarma ( CANF), up 18.9%.

TheStreet Ratings Group would like to highlight 3 stocks pushing the sector higher today:

VirtualScopics ( VSCP) is one of the companies that pushed the Health Care sector higher today. VirtualScopics was up $0.17 (4.0%) to $4.41 on light volume. Throughout the day, 1,582 shares of VirtualScopics exchanged hands as compared to its average daily volume of 7,100 shares. The stock ranged in a price between $3.78-$4.45 after having opened the day at $4.31 as compared to the previous trading day's close of $4.24.

VirtualScopics, Inc. provides imaging solutions for the pharmaceutical, biotechnology, and medical device industries. VirtualScopics has a market cap of $12.8 million and is part of the drugs industry. Shares are up 22.5% year-to-date as of the close of trading on Wednesday. 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.
  • In its most recent trading session, VSCP has closed at a price level that was not very different from its closing price of one year earlier. This is probably due to its weak earnings growth as well as other mixed factors. 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.
  • VSCP, with its decline in revenue, underperformed when compared the industry average of 18.4%. 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

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At the close, XTL Biopharmaceuticals ( XTLB) was up $0.06 (2.0%) to $3.09 on average volume. Throughout the day, 3,686 shares of XTL Biopharmaceuticals exchanged hands as compared to its average daily volume of 4,800 shares. The stock ranged in a price between $3.08-$3.09 after having opened the day at $3.08 as compared to the previous trading day's close of $3.03.

XTL Biopharmaceuticals Ltd., a biopharmaceutical company, is engaged in the acquisition and development of pharmaceutical products for the treatment of unmet medical needs. XTL Biopharmaceuticals has a market cap of $34.1 million and is part of the drugs industry. Shares are up 4.5% year-to-date as of the close of trading on Wednesday. Currently there are no analysts who rate XTL Biopharmaceuticals a buy, 1 analyst rates it a sell, and none rate it a hold.

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TheStreet Ratings rates XTL Biopharmaceuticals as a sell. The company's weaknesses can be seen in multiple areas, such as its disappointing return on equity, weak operating cash flow and generally disappointing historical performance in the stock itself.

Highlights from TheStreet Ratings analysis on XTLB go as follows:

  • 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 Biotechnology industry and the overall market, XTL BIOPHARMACEUTICALS's return on equity significantly trails that of both the industry average and the S&P 500.
  • Net operating cash flow has decreased to -$0.80 million or 44.12% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
  • XTLB'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 48.80%, 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.
  • XTL BIOPHARMACEUTICALS has improved earnings per share by 25.0% 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, XTL BIOPHARMACEUTICALS reported poor results of -$0.22 versus -$0.13 in the prior year.
  • The revenue fell significantly faster than the industry average of 26.1%. Since the same quarter one year prior, revenues fell by 12.8%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.

You can view the full analysis from the report here: XTL Biopharmaceuticals 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 higher today. Aoxing Pharmaceutical was up $0.01 (3.1%) to $0.37 on heavy volume. Throughout the day, 119,516 shares of Aoxing Pharmaceutical exchanged hands as compared to its average daily volume of 38,200 shares. The stock ranged in a price between $0.36-$0.50 after having opened the day at $0.38 as compared to the previous trading day's close of $0.36.

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 $17.0 million and is part of the drugs industry. Shares are up 43.9% year-to-date as of the close of trading on Wednesday. Currently there are no analysts who rate Aoxing Pharmaceutical a buy, no analysts rate it a sell, and none rate it a hold.

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.

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 34.69% 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.

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.

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