Trade-Ideas: Arena Pharmaceuticals (ARNA) Is Today's "Dead Cat Bounce" 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 Arena Pharmaceuticals (ARNA) as a "dead cat bounce" (down big yesterday but up big today) candidate. In addition to specific proprietary factors, Trade-Ideas identified Arena Pharmaceuticals as such a stock due to the following factors:
- ARNA has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $27.0 million.
- ARNA has traded 3.3 million shares today.
- ARNA is up 3.1% today.
- ARNA was down 5.1% yesterday.
EXCLUSIVE OFFER: Get the inside scoop on opportunities in ARNA with the Ticky from Trade-Ideas. See the FREE profile for ARNA NOW at Trade-IdeasMore details on ARNA: Arena Pharmaceuticals, Inc., a biopharmaceutical company, engages in discovering, developing, and commercializing novel drugs that target G protein-coupled receptors in the therapeutic areas of cardiovascular, central nervous system, inflammatory, and metabolic diseases. Currently there are 3 analysts that rate Arena Pharmaceuticals a buy, 1 analyst rates it a sell, and 4 rate it a hold.The average volume for Arena Pharmaceuticals has been 5.0 million shares per day over the past 30 days. Arena has a market cap of $1.5 billion and is part of the health care sector and drugs industry. The stock has a beta of -2.70 and a short float of 30.3% with 15.58 days to cover. Shares are down 25.8% year to date as of the close of trading on Thursday.STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12-months. Learn more.TheStreetRatings.com Analysis:TheStreet Quant Ratings rates Arena Pharmaceuticals as a sell. Among the areas we feel are negative, one of the most important has been a generally disappointing historical performance in the stock itself.Highlights from the ratings report include:
- ARNA has underperformed the S&P 500 Index, declining 18.23% from its price level of one year ago. The fact that the stock is now selling for less than others in its industry in relation to its current earnings is not reason enough to justify a buy rating at this time.
- 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, ARENA PHARMACEUTICALS INC's return on equity significantly trails that of both the industry average and the S&P 500.
- Despite currently having a low debt-to-equity ratio of 0.59, it is higher than that of the industry average, inferring that management of debt levels may need to be evaluated further. Even though the debt-to-equity ratio shows mixed results, the company's quick ratio of 6.77 is very high and demonstrates very strong liquidity.
- The gross profit margin for ARENA PHARMACEUTICALS INC is rather high; currently it is at 60.83%. It has increased significantly from the same period last year. Along with this, the net profit margin of 58.17% significantly outperformed against the industry average.
- Net operating cash flow has significantly increased by 457.21% to $43.71 million when compared to the same quarter last year. In addition, ARENA PHARMACEUTICALS INC has also vastly surpassed the industry average cash flow growth rate of -19.77%.
- You can view the full Arena Pharmaceuticals Ratings Report.
STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12-months. Learn more.
Select the service that is right for you!COMPARE ALL SERVICES
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV