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Trade-Ideas: Omeros Corporation (OMER) Is Today's "Barbarian At The Gate" 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 Omeros Corporation ( OMER) as a "barbarian at the gate" (strong stocks crossing above resistance with today's range greater than 200%) candidate. In addition to specific proprietary factors, Trade-Ideas identified Omeros Corporation as such a stock due to the following factors:

  • OMER has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $20.4 million.
  • OMER has traded 1.9 million shares today.
  • OMER traded in a range 302.1% of the normal price range with a price range of $1.99.
  • OMER traded above its daily resistance level (quality: 320 days, meaning that the stock is crossing a resistance level set by the last 320 calendar days. The resistance price is defined by the Price - $0.01 at the time of the signal).

Stocks matching the 'Barbarian at the Gate' criteria are worthwhile stocks to watch for a variety of factors including historical back testing and volatility. Trade-Ideas targets these opportunities because the stock is exhibiting an unusual behavior while displaying positive price action. In this case, the stock crossed an important inflection point; namely, 'resistance' while at the same time the range of the stock s movement in price is more than twice its normal size. This large range foreshadows a possible continuation as the stock moves higher.

EXCLUSIVE OFFER: Get the inside scoop on opportunities in OMER with the Ticky from Trade-Ideas. See the FREE profile for OMER NOW at Trade-Ideas

More details on OMER:

Omeros Corporation, a clinical-stage biopharmaceutical company, engages in discovering, developing, and commercializing products targeting inflammation, coagulopathies, and disorders of the central nervous system. Currently there are 4 analysts that rate Omeros Corporation a buy, no analysts rate it a sell, and none rate it a hold.

The average volume for Omeros Corporation has been 493,500 shares per day over the past 30 days. Omeros has a market cap of $231.0 million and is part of the health care sector and drugs industry. The stock has a beta of 0.77 and a short float of 26.3% with 2.78 days to cover. Shares are up 49.1% year to date as of the close of trading on Friday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Omeros Corporation as a sell. The company's weaknesses can be seen in multiple areas, such as its feeble growth in its earnings per share, deteriorating net income, weak operating cash flow and generally disappointing historical performance in the stock itself.

Highlights from the ratings report include:

  • OMEROS CORP's earnings per share declined by 26.3% in the most recent quarter compared to the same quarter a year ago. Earnings per share have declined over the last two years. We anticipate that this should continue in the coming year. During the past fiscal year, OMEROS CORP reported poor results of -$1.59 versus -$1.29 in the prior year. For the next year, the market is expecting a contraction of 8.2% in earnings (-$1.72 versus -$1.59).
  • 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 Pharmaceuticals industry. The net income has significantly decreased by 59.2% when compared to the same quarter one year ago, falling from -$8.54 million to -$13.59 million.
  • Net operating cash flow has declined marginally to -$9.39 million or 6.00% when compared to the same quarter last year. In conjunction, when comparing current results to the industry average, OMEROS CORP has marginally lower results.
  • The share price of OMEROS CORP has not done very well: it is down 19.46% and has underperformed the S&P 500, in part reflecting the company's sharply declining earnings per share when compared to the year-earlier quarter. 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.
  • OMER, with its very weak revenue results, has greatly underperformed against the industry average of 3.9%. Since the same quarter one year prior, revenues plummeted by 90.8%. The declining revenue appears to have seeped down to the company's bottom line, decreasing earnings per share.

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