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Trade-Ideas: Astex Pharmaceuticals (ASTX) Is Today's "Perilous Reversal" Stock

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

Trade-Ideas LLC identified Astex Pharmaceuticals ( ASTX) as a "perilous reversal" (up big yesterday but down big today) candidate. In addition to specific proprietary factors, Trade-Ideas identified Astex Pharmaceuticals as such a stock due to the following factors:

  • ASTX has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $15.5 million.
  • ASTX has traded 14.4 million shares today.
  • ASTX is down 3.1% today.
  • ASTX was up 24.5% yesterday.

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More details on ASTX:

Astex Pharmaceuticals, Inc. engages in the discovery and development of small molecule therapeutics with a focus on oncology and hematology using its fragment-based drug discovery platform, Pyramid. Currently there are 3 analysts that rate Astex Pharmaceuticals a buy, no analysts rate it a sell, and none rate it a hold.

The average volume for Astex Pharmaceuticals has been 1.3 million shares per day over the past 30 days. Astex has a market cap of $550.7 million and is part of the health care sector and drugs industry. The stock has a beta of 1.68 and a short float of 6.3% with 2.56 days to cover. Shares are up 99.3% year to date as of the close of trading on Tuesday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Astex Pharmaceuticals as a hold. The company's strengths can be seen in multiple areas, such as its solid stock price performance and largely solid financial position with reasonable debt levels by most measures. However, as a counter to these strengths, we also find weaknesses including feeble growth in the company's earnings per share, deteriorating net income and disappointing return on equity.

Highlights from the ratings report include:

  • Compared to its price level of one year ago, ASTX is up 103.29% to its most recent closing price of 5.55. Looking ahead, our view is that this company's fundamentals should not have much impact in either direction, allowing the stock to generally move up or down based on the push and pull of the broad market.
  • ASTX 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 5.04, which clearly demonstrates the ability to cover short-term cash needs.
  • ASTX, with its decline in revenue, underperformed when compared the industry average of 9.7%. Since the same quarter one year prior, revenues fell by 16.4%. The declining revenue appears to have seeped down to the company's bottom line, decreasing earnings per share.
  • ASTEX PHARMACEUTICALS INC has exprienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. Stable earnings per share over the past year indicate the company has managed its earnings and share float. We anticipate this stability to falter in the coming year and, in turn, the company to deliver lower earnings per share than prior full year. During the past fiscal year, ASTEX PHARMACEUTICALS INC reported lower earnings of $0.08 versus $0.09 in the prior year. For the next year, the market is expecting a contraction of 412.5% in earnings (-$0.25 versus $0.08).
  • 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 437.3% when compared to the same quarter one year ago, falling from $1.24 million to -$4.18 million.

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