NEW YORK (TheStreet) -- Shares of Actavis (ACT) are down 2.7% to $235.27 after the company was downgraded to "equal-weight" from "overweight" by Barclays Investment Bank this morning.
Barclays lowered the integrated specialty pharmaceutical company because based on a valuation call.
Actavis' price target remains unchanged at $250.
TheStreet Ratings team rates ACTAVIS PLC as a Hold with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:
"We rate ACTAVIS PLC (ACT) a HOLD. The primary factors that have impacted our rating are mixed ? some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its robust revenue growth, compelling growth in net income and good cash flow from operations. However, as a counter to these strengths, we find that the company has favored debt over equity in the management of its balance sheet."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The revenue growth greatly exceeded the industry average of 4.7%. Since the same quarter one year prior, revenues rose by 34.0%. Growth in the company's revenue appears to have helped boost the earnings per share.
- 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 108.6% when compared to the same quarter one year prior, rising from -$564.80 million to $48.70 million.
- ACTAVIS PLC reported significant earnings per share improvement 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, ACTAVIS PLC swung to a loss, reporting -$5.43 versus $0.75 in the prior year. This year, the market expects an improvement in earnings ($13.27 versus -$5.43).
- 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, ACTAVIS PLC's return on equity significantly trails that of both the industry average and the S&P 500.
- The debt-to-equity ratio of 1.27 is relatively high when compared with the industry average, suggesting a need for better debt level management. Even though the debt-to-equity ratio is weak, ACT's quick ratio is somewhat strong at 1.40, demonstrating the ability to handle short-term liquidity needs.
- You can view the full analysis from the report here: ACT Ratings Report