Why LipoScience (LPDX) Stock Is Jumping Today

NEW YORK (TheStreet) -- LipoScience (LPDX) was gaining 62.4% to $5.18 Thursday after LabCorp (LH) announced it will acquire the specialized cardiovascular diagnostic laboratory test provider.

LabCorp will acquire LipoScience for $85.3 million, or $5.25 a share, in cash. The acquisition values LipoScience about $63 million.

The LipoScience board of directors approved the acquisition unanimously, and recommended that shareholder also approve the deal. "We believe LipoScience becoming part of LabCorp is a great outcome for patients, physicians, and our other stakeholders," LipoScience president and CEO Howard Doran said in a statement.

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Shares of LabCorp were falling 1% to $102.83 following the news.

TheStreet Ratings team rates LIPOSCIENCE INC as a Sell with a ratings score of D. TheStreet Ratings Team has this to say about their recommendation:

"We rate LIPOSCIENCE INC (LPDX) a SELL. This is driven by several weaknesses, which we believe should have a greater impact than any strengths, and could make it more difficult for investors to achieve positive results compared to most of the stocks we cover. The company's weaknesses can be seen in multiple areas, such as its feeble growth in its earnings per share, deteriorating net income, disappointing return on equity and generally disappointing historical performance in the stock itself."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • LIPOSCIENCE INC has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. Earnings per share have declined over the last two years. We anticipate that this should continue in the coming year. During the past fiscal year, LIPOSCIENCE INC swung to a loss, reporting -$0.86 versus $0.08 in the prior year. For the next year, the market is expecting a contraction of 4.7% in earnings (-$0.90 versus -$0.86).
  • 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 66.0% when compared to the same quarter one year ago, falling from -$2.44 million to -$4.06 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 Biotechnology industry and the overall market, LIPOSCIENCE INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 37.48%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 58.82% compared to the year-earlier 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.
  • The gross profit margin for LIPOSCIENCE INC is currently very high, coming in at 78.82%. Regardless of LPDX's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, LPDX's net profit margin of -44.84% significantly underperformed when compared to the industry average.
  • You can view the full analysis from the report here: LPDX Ratings Report

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