Trade-Ideas: Ariad Pharmaceuticals (ARIA) 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 Ariad Pharmaceuticals (ARIA) 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 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 $67.9 million.
- ARIA has traded 34.1 million shares today.
- ARIA traded in a range 230.9% of the normal price range with a price range of $0.63.
- ARIA traded above its daily resistance level (quality: 44 days, meaning that the stock is crossing a resistance level set by the last 44 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 ARIA with the Ticky from Trade-Ideas. See the FREE profile for ARIA NOW at Trade-IdeasMore details on ARIA: ARIAD Pharmaceuticals, Inc., an oncology company, focuses on the discovery, development, and commercialization of medicines for cancer patients. Currently there is 1 analyst that rates Ariad Pharmaceuticals a buy, 3 analysts rate it a sell, and 10 rate it a hold.The average volume for Ariad Pharmaceuticals has been 12.4 million shares per day over the past 30 days. Ariad has a market cap of $518.0 million and is part of the health care sector and drugs industry. The stock has a beta of 0.88 and a short float of 15% with 1.79 days to cover. Shares are down 85.5% 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 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, 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 12.5% 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 17.2% in earnings (-$1.57 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 decreased by 24.7% when compared to the same quarter one year ago, dropping from -$53.21 million to -$66.34 million.
- Net operating cash flow has decreased to -$56.17 million or 26.41% when compared to the same quarter last year. In addition, when comparing the cash generation rate to the industry average, the firm's growth is significantly lower.
- Looking at the price performance of ARIA's shares over the past 12 months, there is not much good news to report: the stock is down 86.97%, and it has underformed the S&P 500 Index. In addition, the company's earnings per share are lower today than the year-earlier quarter. Naturally, the overall market trend is bound to be a significant factor. However, in one sense, the stock's sharp decline last year is a positive for future investors, making it cheaper (in proportion to its earnings over the past year) than most other stocks in its industry. But due to other concerns, we feel the stock is still not a good buy right now.
- 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, ARIAD PHARMACEUTICALS INC's return on equity significantly trails that of both the industry average and the S&P 500.
- You can view the full Ariad 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