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Water-Logged And Getting Wetter: Regeneron Pharmaceuticals (REGN)

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 Regeneron Pharmaceuticals ( REGN) 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 Regeneron Pharmaceuticals as such a stock due to the following factors:

  • REGN has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $345.0 million.
  • REGN has traded 1.2 million shares today.
  • REGN traded in a range 230.2% of the normal price range with a price range of $26.00.
  • REGN traded below its daily resistance level (quality: 21 days, meaning that the stock is crossing a resistance level set by the last 21 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.

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

More details on REGN:

Regeneron Pharmaceuticals, Inc., a biopharmaceutical company, discovers, invents, develops, manufactures, and commercializes medicines for the treatment of serious medical conditions in the United States and internationally. REGN has a PE ratio of 90.7. Currently there are 9 analysts that rate Regeneron Pharmaceuticals a buy, no analysts rate it a sell, and 6 rate it a hold.

The average volume for Regeneron Pharmaceuticals has been 965,000 shares per day over the past 30 days. Regeneron has a market cap of $33.8 billion and is part of the health care sector and drugs industry. The stock has a beta of 0.76 and a short float of 6.2% with 3.62 days to cover. Shares are up 25.5% year-to-date as of the close of trading on Thursday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Regeneron Pharmaceuticals as a hold. The company's strengths can be seen in multiple areas, such as its robust revenue growth, largely solid financial position with reasonable debt levels by most measures and good cash flow from operations. However, as a counter to these strengths, we also find weaknesses including deteriorating net income and feeble growth in the company's earnings per share.

Highlights from the ratings report include:

  • The revenue growth greatly exceeded the industry average of 15.8%. Since the same quarter one year prior, revenues rose by 47.2%. 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.
  • REGN's debt-to-equity ratio is very low at 0.26 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Along with this, the company maintains a quick ratio of 5.31, which clearly demonstrates the ability to cover short-term cash needs.
  • 36.59% is the gross profit margin for REGENERON PHARMACEUTICALS which we consider to be strong. Regardless of REGN's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 15.85% trails the industry average.
  • REGENERON PHARMACEUTICALS has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. The company has reported a trend of declining earnings per share over the past year. However, the consensus estimate suggests that this trend should reverse in the coming year. During the past fiscal year, REGENERON PHARMACEUTICALS reported lower earnings of $3.80 versus $6.61 in the prior year. This year, the market expects an improvement in earnings ($4.38 versus $3.80).
  • 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 79.4% when compared to the same quarter one year ago, falling from $470.41 million to $96.81 million.

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