Will ZIOPHARM Oncology (ZIOP) Stock Decline After Analyst Downgrade?

NEW YORK (TheStreet) -- Shares of ZIOPHARM Oncology Inc  (ZIOP) were up 0.41% to $12.19 in mid-morning trading Monday, despite getting a rating cut by analysts at BMO Capital earlier this morning.

The firm downgraded shares of the biotechnology company to "market perform" from "outperform" on a valuation call.

BMO analysts lowered its price target to $10 from $15, adding that they believe the company has fallen further behind its competitors.

Boston-based ZIOPHARM Oncology is a biotechnology company that employs gene expression, control, and cell technologies to deliver cell-based therapies for the treatment of cancer. 

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

"We rate ZIOPHARM ONCOLOGY INC (ZIOP) a SELL. This is driven by multiple 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 deteriorating net income, weak operating cash flow and feeble growth in its earnings per share."

Highlights from the analysis by TheStreet Ratings Team goes 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 Biotechnology industry. The net income has significantly decreased by 705.6% when compared to the same quarter one year ago, falling from -$9.71 million to -$78.23 million.
  • Net operating cash flow has decreased to -$9.72 million or 12.28% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
  • ZIOPHARM ONCOLOGY 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. This company has reported somewhat volatile earnings recently. We feel it is likely to report a decline in earnings in the coming year. During the past fiscal year, ZIOPHARM ONCOLOGY INC continued to lose money by earning -$0.32 versus -$0.66 in the prior year. For the next year, the market is expecting a contraction of 117.2% in earnings (-$0.70 versus -$0.32).
  • 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 Biotechnology industry and the overall market, ZIOPHARM ONCOLOGY INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • ZIOP has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign. Along with this, the company maintains a quick ratio of 12.37, which clearly demonstrates the ability to cover short-term cash needs.
  • You can view the full analysis from the report here: ZIOP Ratings Report

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