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

  • ACAD has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $107.1 million.
  • ACAD has traded 1.9 million shares today.
  • ACAD is down 5.1% today.
  • ACAD was up 16% yesterday.

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More details on ACAD:

ACADIA Pharmaceuticals Inc., a biopharmaceutical company, focuses on innovative treatments that address unmet medical needs in neurological and related central nervous system disorders. Currently there are 8 analysts that rate ACADIA Pharmaceuticals a buy, no analysts rate it a sell, and none rate it a hold.

The average volume for ACADIA Pharmaceuticals has been 1.9 million shares per day over the past 30 days. ACADIA has a market cap of $2.2 billion and is part of the health care sector and drugs industry. The stock has a beta of 3.87 and a short float of 15.8% with 1.84 days to cover. Shares are up 436.3% year to date as of the close of trading on Friday.

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 ACADIA Pharmaceuticals as a sell. 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 ratings report include:

  • 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 67.6% when compared to the same quarter one year ago, falling from -$5.42 million to -$9.08 million.
  • Net operating cash flow has decreased to -$5.44 million or 13.41% when compared to the same quarter last year. Despite a decrease in cash flow of 13.41%, ACADIA PHARMACEUTICALS INC is in line with the industry average cash flow growth rate of -19.69%.
  • ACADIA PHARMACEUTICALS INC's earnings per share declined by 10.0% in the most recent quarter compared to 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, ACADIA PHARMACEUTICALS INC continued to lose money by earning -$0.37 versus -$0.44 in the prior year. For the next year, the market is expecting a contraction of 20.3% in earnings (-$0.45 versus -$0.37).
  • 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, ACADIA PHARMACEUTICALS INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • The revenue fell significantly faster than the industry average of 9.0%. Since the same quarter one year prior, revenues fell by 24.7%. The declining revenue appears to have seeped down to the company's bottom line, decreasing earnings per share.

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