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Water-Logged And Getting Wetter: Celgene Corporation (CELG)

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 Celgene Corporation ( CELG) as a "water-logged and getting wetter" (weak stocks crossing below support with today's range greater than 200%) candidate. In addition to specific proprietary factors, Trade-Ideas identified Celgene Corporation as such a stock due to the following factors:

  • CELG has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $371.8 million.
  • CELG has traded 4.5 million shares today.
  • CELG traded in a range 288.4% of the normal price range with a price range of $10.65.
  • CELG traded below its daily resistance level (quality: 6 days, meaning that the stock is crossing a resistance level set by the last 6 calendar days. The resistance price is defined by the Price - $0.01 at the time of the signal).

Stocks matching the 'Water-Logged and Getting Wetter' 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 negative price action. In this case, the stock crossed an important inflection point; namely, "support" while at the same time the range of the stock's movement in price is twice its normal size. This large range foreshadows a possible continuation as the stock moves lower.

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More details on CELG:

Celgene Corporation discovers, develops, and commercializes therapies for cancer and immune-inflammatory related diseases in the United States and Europe. CELG has a PE ratio of 48.5. Currently there are 22 analysts that rate Celgene Corporation a buy, no analysts rate it a sell, and 2 rate it a hold.

The average volume for Celgene Corporation has been 2.7 million shares per day over the past 30 days. Celgene has a market cap of $69.5 billion and is part of the health care sector and drugs industry. The stock has a beta of 0.81 and a short float of 1.1% with 2.40 days to cover. Shares are up 0.5% year-to-date as of the close of trading on Friday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Celgene Corporation as a buy. The company's strengths can be seen in multiple areas, such as its robust revenue growth, expanding profit margins, largely solid financial position with reasonable debt levels by most measures, solid stock price performance and notable return on equity. We feel these strengths outweigh the fact that the company has had sub par growth in net income.

Highlights from the ratings report include:

  • CELG's revenue growth has slightly outpaced the industry average of 10.6%. Since the same quarter one year prior, revenues rose by 18.0%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • The gross profit margin for CELGENE CORP is currently very high, coming in at 96.52%. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of 22.24% trails the industry average.
  • CELG's debt-to-equity ratio of 0.79 is somewhat low overall, but it is high when compared to the industry average, implying that the management of the debt levels should be evaluated further. Even though the debt-to-equity ratio shows mixed results, the company's quick ratio of 3.58 is very high and demonstrates very strong liquidity.
  • Compared to its closing price of one year ago, CELG's share price has jumped by 82.69%, exceeding the performance of the broader market during that same time frame. Looking ahead, the stock's sharp rise over the last year has already helped drive it to a level which is relatively expensive compared to the rest of its industry. We feel, however, that other strengths this company displays justify these higher price levels.
  • CELGENE CORP's earnings per share declined by 10.3% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, CELGENE CORP increased its bottom line by earning $3.30 versus $2.85 in the prior year. This year, the market expects an improvement in earnings ($5.99 versus $3.30).

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