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 2.0% versus the S&P 500, which was down 1.1%. Laggards within the Health Care sector included China Pharma ( CPHI), down 2.4%, SunLink Health Systems ( SSY), down 2.9%, Bio-Rad Laboratories ( BIO.B), down 1.8%, VirtualScopics ( VSCP), down 4.2% and CymaBay Therapeutics ( CBAY), down 8.8%.

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

Sanofi ( SNY) is one of the companies that pushed the Health Care sector lower today. Sanofi was down $1.02 (2.0%) to $50.83 on light volume. Throughout the day, 590,275 shares of Sanofi exchanged hands as compared to its average daily volume of 973,900 shares. The stock ranged in price between $50.81-$51.83 after having opened the day at $51.48 as compared to the previous trading day's close of $51.85.

Sanofi researches, develops, manufactures, and markets healthcare products. The company operates in three segments: Pharmaceuticals, Human Vaccines, and Animal Health. Sanofi has a market cap of $136.2 billion and is part of the drugs industry. Shares are down 3.3% year-to-date as of the close of trading on Wednesday. Currently there are 2 analysts who rate Sanofi a buy, no analysts rate it a sell, and 4 rate it a hold.

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TheStreet Ratings rates Sanofi as a buy. The company's strengths can be seen in multiple areas, such as its revenue growth, increase in net income, expanding profit margins and growth in earnings per share. We feel these strengths outweigh the fact that the company has had lackluster performance in the stock itself.

Highlights from TheStreet Ratings analysis on SNY go as follows:

  • The revenue growth came in higher than the industry average of 5.6%. Since the same quarter one year prior, revenues slightly increased by 4.4%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • The net income growth from the same quarter one year ago has exceeded that of the S&P 500 and the Pharmaceuticals industry average. The net income increased by 17.8% when compared to the same quarter one year prior, going from $1,267.50 million to $1,493.43 million.
  • The gross profit margin for SANOFI is rather high; currently it is at 59.71%. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of 13.67% trails the industry average.
  • SANOFI has improved earnings per share by 16.7% 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, SANOFI reported lower earnings of $1.90 versus $2.44 in the prior year. This year, the market expects an improvement in earnings ($3.53 versus $1.90).
  • In its most recent trading session, SNY 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. Looking ahead, the stock's rise over the last year has already helped drive it to a level which is relatively expensive compared to the rest of its industry. We feel, however, that the other strengths this company displays justify these higher price levels.

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

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At the close, VirtualScopics ( VSCP) was down $0.18 (4.2%) to $4.09 on light volume. Throughout the day, 1,040 shares of VirtualScopics exchanged hands as compared to its average daily volume of 6,800 shares. The stock ranged in price between $4.09-$4.29 after having opened the day at $4.29 as compared to the previous trading day's close of $4.27.

VirtualScopics, Inc. provides imaging solutions for the pharmaceutical, biotechnology, and medical device industries. VirtualScopics has a market cap of $13.0 million and is part of the drugs industry. Shares are up 23.4% 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. The company's weaknesses can be seen in multiple areas, such as its poor profit margins and generally disappointing historical performance in the stock itself.

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.
  • 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. 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.
  • 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.
  • 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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China Pharma ( CPHI) was another company that pushed the Health Care sector lower today. China Pharma was down $0.01 (2.4%) to $0.28 on heavy volume. Throughout the day, 130,192 shares of China Pharma exchanged hands as compared to its average daily volume of 22,500 shares. The stock ranged in price between $0.28-$0.30 after having opened the day at $0.30 as compared to the previous trading day's close of $0.29.

China Pharma Holdings, Inc. develops, manufactures, and markets generic and branded pharmaceutical, and biochemical products to hospitals and private retailers in the People's Republic of China. China Pharma has a market cap of $13.5 million and is part of the drugs industry. Shares are down 10.1% year-to-date as of the close of trading on Wednesday.

TheStreet Ratings rates China Pharma as a sell. Among the areas we feel are negative, one of the most important has been an overall disappointing return on equity.

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Highlights from TheStreet Ratings analysis on CPHI go as follows:

  • 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, CHINA PHARMA HOLDINGS INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • CHINA PHARMA HOLDINGS INC has improved earnings per share by 16.7% 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, CHINA PHARMA HOLDINGS INC swung to a loss, reporting -$0.45 versus $0.10 in the prior year.
  • CPHI, with its decline in revenue, slightly underperformed the industry average of 5.6%. Since the same quarter one year prior, revenues fell by 14.1%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
  • 41.65% is the gross profit margin for CHINA PHARMA HOLDINGS INC which we consider to be strong. It has increased significantly from the same period last year. Regardless of the strong results of the gross profit margin, the net profit margin of -33.63% is in-line with the industry average.
  • Net operating cash flow has significantly increased by 124.81% to $2.49 million when compared to the same quarter last year. In addition, CHINA PHARMA HOLDINGS INC has also vastly surpassed the industry average cash flow growth rate of 10.91%.

You can view the full analysis from the report here: China Pharma 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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