Hyperion Therapeutics Inc Stock Upgraded (HPTX)

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.

NEW YORK ( TheStreet) -- Hyperion Therapeutics (Nasdaq: HPTX) has been upgraded by TheStreet Ratings from sell to hold. The company's strengths can be seen in multiple areas, such as its robust revenue growth, largely solid financial position with reasonable debt levels by most measures and reasonable valuation levels. However, as a counter to these strengths, we also find weaknesses including unimpressive growth in net income, a generally disappointing performance in the stock itself and feeble growth in the company's earnings per share.

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Highlights from the ratings report include:
  • HPTX's very impressive revenue growth greatly exceeded the industry average of 40.8%. Since the same quarter one year prior, revenues leaped by 407.8%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • HPTX's debt-to-equity ratio is very low at 0.04 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Along with this, the company maintains a quick ratio of 3.29, which clearly demonstrates the ability to cover short-term cash needs.
  • The gross profit margin for HYPERION THERAPEUTICS INC is currently very high, coming in at 85.21%. Regardless of HPTX's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, HPTX's net profit margin of 47.11% compares favorably to the industry average.
  • The share price of HYPERION THERAPEUTICS INC has not done very well: it is down 8.81% 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.
  • 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 Biotechnology industry. The net income has significantly decreased by 30.1% when compared to the same quarter one year ago, falling from $25.02 million to $17.48 million.

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