Aoxing Pharmaceutical (AXN) Stock Plummeting to Reverse Yesterday's Gains

NEW YORK (TheStreet) -- Shares of Aoxing Pharmaceutical Company Inc (AXN) were down 12.03% to $2.34 on heavy volume, shedding its gains from the prior session.

Yesterday, shares rallied after Aoxing Pharmaceutical announced that the China Food and Drug Administration issued licenses to produce 50mg and 100 mg tablets of Tilidine Hydrochloride to its subsidiary. 

"This approval is the culmination of 12 years of research, development and regulatory activities. Our entry into the market will be a significant break-through in China's fight to treat pain," Aoxing Pharmaceutical chairman and CEO Zhenjiang Yue said in a statement.

"Our Tilidine HCL tablets offer a convenient medium for delivery of this drug, which is essential in the fight against pain. Aoxing will be the sole producer of Tilidine HCL tablets in China," Yue added.

About 2.29 million shares have exchanged hands as of 11:46 a.m. ET today, compared to its average trading volume of about 1.26 million shares a day.

Jersey City, N.J.-based Aoxing Pharma is a pharmaceutical company that specializes in research, development, manufacturing and distribution of a variety of narcotics and pain-management products and drug-relief medicine.

The company has more than 100 products in various formulations including injection, tablets, capsules, oral solution and powders.

Separately, TheStreet Ratings team rates AOXING PHARMACEUTICAL CO INC as a Sell with a ratings score of D-. TheStreet Ratings Team has this to say about their recommendation:

"We rate AOXING PHARMACEUTICAL CO INC (AXN) a SELL. This is driven by a few notable 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. Among the areas we feel are negative, one of the most important has been very high debt management risk by most measures."

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

  • The debt-to-equity ratio is very high at 6.71 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. Along with this, the company manages to maintain a quick ratio of 0.19, which clearly demonstrates the inability to cover short-term cash needs.
  • 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, AOXING PHARMACEUTICAL CO INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • The gross profit margin for AOXING PHARMACEUTICAL CO INC is currently very high, coming in at 76.69%. It has increased significantly from the same period last year. Despite the strong results of the gross profit margin, AXN's net profit margin of 8.81% significantly trails the industry average.
  • Net operating cash flow has significantly increased by 1057.02% to $5.66 million when compared to the same quarter last year. In addition, AOXING PHARMACEUTICAL CO INC has also vastly surpassed the industry average cash flow growth rate of -20.80%.
  • This stock has increased by 496.55% over the past year, outperforming the rise in the S&P 500 Index during the same period. Regarding the future course of this stock, we feel that the risks involved in investing in AXN do not compensate for any future upside potential, despite the fact that it has seen nice gains over the past 12 months.
  • You can view the full analysis from the report here: AXN Ratings Report

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