3 Stocks Pushing The Drugs Industry 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 Drugs industry as a whole closed the day up 0.5% versus the S&P 500, which was up 0.1%. Laggards within the Drugs industry included Aurinia Pharmaceuticals ( AUPH), down 2.9%, Tianyin Pharmaceutical ( TPI), down 1.6%, Novogen ( NVGN), down 3.4%, Vermillion ( VRML), down 5.9% and Merus Labs International ( MSLI), down 2.6%.

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

PDL BioPharma ( PDLI) is one of the companies that pushed the Drugs industry lower today. PDL BioPharma was down $1.17 (12.1%) to $8.48 on heavy volume. Throughout the day, 10,885,696 shares of PDL BioPharma exchanged hands as compared to its average daily volume of 2,410,400 shares. The stock ranged in price between $8.42-$9.40 after having opened the day at $9.23 as compared to the previous trading day's close of $9.65.

PDL BioPharma, Inc. manages a portfolio of patents and royalty assets. The company is involved in the humanization of monoclonal antibodies and the discovery of a new generation of targeted treatments for cancer and immunologic diseases. It offers Queen et al. PDL BioPharma has a market cap of $1.5 billion and is part of the health care sector. Shares are up 14.3% year-to-date as of the close of trading on Tuesday. Currently there are no analysts who rate PDL BioPharma a buy, no analysts rate it a sell, and 2 rate it a hold.

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TheStreet Ratings rates PDL BioPharma as a buy. The company's strengths can be seen in multiple areas, such as its notable return on equity, attractive valuation levels, expanding profit margins and solid stock price performance. We feel these strengths outweigh the fact that the company has had sub par growth in net income.

Highlights from TheStreet Ratings analysis on PDLI go as follows:

  • Compared to other companies in the Biotechnology industry and the overall market, PDL BIOPHARMA INC's return on equity significantly exceeds that of both the industry average and the S&P 500.
  • The gross profit margin for PDL BIOPHARMA INC is currently very high, coming in at 94.02%. Regardless of PDLI's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, PDLI's net profit margin of 79.60% significantly outperformed against the industry.
  • Compared to where it was a year ago today, the stock is now trading at a higher level, regardless of the company's weak earnings results. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
  • PDL BIOPHARMA INC's earnings per share declined by 16.1% 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, PDL BIOPHARMA INC increased its bottom line by earning $1.73 versus $1.47 in the prior year. This year, the market expects an improvement in earnings ($2.07 versus $1.73).

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

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At the close, Merus Labs International ( MSLI) was down $0.05 (2.6%) to $1.84 on light volume. Throughout the day, 18,216 shares of Merus Labs International exchanged hands as compared to its average daily volume of 31,200 shares. The stock ranged in price between $1.81-$1.89 after having opened the day at $1.87 as compared to the previous trading day's close of $1.89.

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 $150.9 million and is part of the health care sector. Shares are up 32.4% year-to-date as of the close of trading on Tuesday.

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TheStreet Ratings rates Merus Labs International as a hold. The company's strengths can be seen in multiple areas, such as its solid stock price performance, compelling growth in net income and largely solid financial position with reasonable debt levels by most measures. However, as a counter to these strengths, we find that the company's return on equity has been disappointing.

Highlights from TheStreet Ratings analysis on MSLI go as follows:

  • This stock has managed to rise its share value by 92.15% over the past twelve months. Regarding the stock's future course, our hold rating indicates that we do not recommend additional investment in this stock despite its gains in the past year.
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Pharmaceuticals industry. The net income increased by 83.6% when compared to the same quarter one year prior, rising from -$1.05 million to -$0.17 million.
  • Regardless of the drop in revenue, the company managed to outperform against the industry average of 4.7%. Since the same quarter one year prior, revenues slightly dropped by 4.4%. Weakness in the company's revenue seems to not be hurting the bottom line, shown by stable earnings per share.
  • The gross profit margin for MERUS LABS INTERNATIONAL INC is currently very high, coming in at 80.97%. 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 -2.39% significantly underperformed when compared to the industry average.
  • 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.

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

Vermillion ( VRML) was another company that pushed the Drugs industry lower today. Vermillion was down $0.12 (5.9%) to $1.90 on heavy volume. Throughout the day, 118,912 shares of Vermillion exchanged hands as compared to its average daily volume of 28,600 shares. The stock ranged in price between $1.77-$2.00 after having opened the day at $1.99 as compared to the previous trading day's close of $2.02.

Vermillion, Inc., together with its subsidiaries, is engaged in the discovery, development, and commercialization of diagnostic tests that help physicians diagnose, treat, and enhance outcomes for patients. It develops diagnostic tests in the fields of oncology and women's health. Vermillion has a market cap of $73.6 million and is part of the health care sector. Shares are down 13.1% year-to-date as of the close of trading on Tuesday.

TheStreet Ratings rates Vermillion as a sell. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income, disappointing return on equity and weak operating cash flow.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

Highlights from TheStreet Ratings analysis on VRML go as follows:

  • 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 162.4% when compared to the same quarter one year ago, falling from -$2.12 million to -$5.56 million.
  • 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 Health Care Equipment & Supplies industry and the overall market, VERMILLION INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • Net operating cash flow has significantly decreased to -$3.75 million or 117.58% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
  • In its most recent trading session, VRML 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.
  • VERMILLION INC's earnings per share declined by 36.4% 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, VERMILLION INC continued to lose money by earning -$0.45 versus -$0.47 in the prior year.

You can view the full analysis from the report here: Vermillion 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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