NEW YORK (TheStreet) -- Shares of Ariad Pharmaceuticals (ARIA) are down 2.85% to $6.82 in pre-market trading after Credit Suisse downgraded the global oncology company to "underperform" from "neutral" and lowered its price target to $6 from $8.
"Launches [are] still tepid in U.S. and EU. Metrics for the re-launch suggest Iclusig is reserved for the sicker patients and this trend is not likely to change until ARIA provides new clinical data, which could be at least 18 to 24 months away," analysts said.
"ARIA estimates half of chronic myelogenous leukemia (CML) patients receiving Iclusig are chronic phase patients. We think the large majority of second line CML patients are T315I patients, indicating that doctors are reluctant to use Iclusig ahead of other approved TKIs in patients without resistant mutations," analysts noted.
"Near-term U.S. sales will benefit from the implementation of the new pricing strategy that doubled the 30 mg price. However, we think this will likely be short-lived and sales will face a drop in H2:15 when ARIA moves to true flat pricing," analysts added.
Separately, TheStreet Ratings team rates ARIAD PHARMACEUTICALS INC as a Sell with a ratings score of D-. TheStreet Ratings Team has this to say about their recommendation:
"We rate ARIAD PHARMACEUTICALS INC (ARIA) a SELL. This is driven by some concerns, 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 disappointing return on equity and generally high debt management risk."
Highlights from the analysis by TheStreet Ratings Team goes 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 Biotechnology industry and the overall market, ARIAD PHARMACEUTICALS INC's return on equity significantly trails that of both the industry average and the S&P 500.
- Currently the debt-to-equity ratio of 1.91 is quite high overall and when compared to the industry average, suggesting that the current management of debt levels should be re-evaluated. Despite the company's weak debt-to-equity ratio, the company has managed to keep a very strong quick ratio of 3.85, which shows the ability to cover short-term cash needs.
- The company, on the basis of net income growth from the same quarter one year ago, has significantly underperformed compared to the Biotechnology industry average, but is greater than that of the S&P 500. The net income increased by 24.5% when compared to the same quarter one year prior, going from -$66.34 million to -$50.11 million.
- The revenue fell significantly faster than the industry average of 40.7%. Since the same quarter one year prior, revenues fell by 12.3%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
- ARIAD PHARMACEUTICALS INC has improved earnings per share by 25.0% 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, ARIAD PHARMACEUTICALS INC reported poor results of -$1.49 versus -$1.34 in the prior year. This year, the market expects an improvement in earnings (-$1.12 versus -$1.49).
- You can view the full analysis from the report here: ARIA Ratings Report