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Trade-Ideas: Ariad Pharmaceuticals (ARIA) Is Today's Pre-Market Mover With Heavy Volume 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 Ariad Pharmaceuticals ( ARIA) as a pre-market mover with heavy volume candidate. In addition to specific proprietary factors, Trade-Ideas identified Ariad Pharmaceuticals as such a stock due to the following factors:

  • ARIA has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $29.0 million.
  • ARIA traded 667,300 shares today in the pre-market hours as of 7:38 AM, representing 15.5% of its average daily volume.

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More details on ARIA:

ARIAD Pharmaceuticals, Inc., an oncology company, focuses on the discovery, development, and commercialization of medicines for cancer patients. Currently there are 10 analysts that rate Ariad Pharmaceuticals a buy, no analysts rate it a sell, and 2 rate it a hold.

The average volume for Ariad Pharmaceuticals has been 2.6 million shares per day over the past 30 days. Ariad has a market cap of $3.7 billion and is part of the health care sector and drugs industry. The stock has a beta of 1.52 and a short float of 10.6% with 4.40 days to cover. Shares are up 3.3% year to date as of the close of trading on Friday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Ariad Pharmaceuticals 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, disappointing return on equity, weak operating cash flow and generally disappointing historical performance in the stock itself.

Highlights from the ratings report include:

  • ARIAD PHARMACEUTICALS INC's earnings per share declined by 19.4% 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, ARIAD PHARMACEUTICALS INC reported poor results of -$1.34 versus -$0.93 in the prior year. For the next year, the market is expecting a contraction of 22.4% in earnings (-$1.64 versus -$1.34).
  • 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 34.4% when compared to the same quarter one year ago, falling from -$51.31 million to -$68.99 million.
  • Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Biotechnology industry and the overall market, ARIAD PHARMACEUTICALS INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • Net operating cash flow has decreased to -$45.69 million or 21.53% when compared to the same quarter last year. In conjunction, when comparing current results to the industry average, ARIAD PHARMACEUTICALS INC has marginally lower results.
  • Reflecting the weaknesses we have cited, including the decline in the company's earnings per share, ARIA has underperformed the S&P 500 Index, declining 23.80% 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.

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