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Biogen Idec (BIIB) Shows Signs Of Being Water-Logged And Getting Wetter

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 Biogen Idec ( BIIB) 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 Biogen Idec as such a stock due to the following factors:

  • BIIB has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $472.5 million.
  • BIIB has traded 2.1 million shares today.
  • BIIB traded in a range 224.2% of the normal price range with a price range of $25.86.
  • BIIB traded below its daily resistance level (quality: 7 days, meaning that the stock is crossing a resistance level set by the last 7 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 BIIB:

Biogen Idec Inc. discovers, develops, manufactures, and markets therapies for the treatment of neurodegenerative diseases, hemophilia, and autoimmune disorders in the United States and internationally. BIIB has a PE ratio of 45.1. Currently there are 14 analysts that rate Biogen Idec a buy, no analysts rate it a sell, and 6 rate it a hold.

The average volume for Biogen Idec has been 1.4 million shares per day over the past 30 days. Biogen Idec has a market cap of $82.7 billion and is part of the health care sector and drugs industry. The stock has a beta of 1.32 and a short float of 1.4% with 2.08 days to cover. Shares are up 24.1% year-to-date as of the close of trading on Thursday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Biogen Idec as a buy. 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, notable return on equity, reasonable valuation levels and solid stock price performance. Although the company may harbor some minor weaknesses, we feel they are unlikely to have a significant impact on results.

Highlights from the ratings report include:

  • The revenue growth came in higher than the industry average of 14.9%. Since the same quarter one year prior, revenues rose by 38.6%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • BIIB's debt-to-equity ratio is very low at 0.07 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.31, which illustrates the ability to avoid short-term cash problems.
  • The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Biotechnology industry and the overall market, BIOGEN IDEC INC's return on equity exceeds that of both the industry average and the S&P 500.
  • Powered by its strong earnings growth of 56.09% and other important driving factors, this stock has surged by 88.50% over the past year, outperforming the rise in the S&P 500 Index during the same period. Regarding the stock's future course, although almost any stock can fall in a broad market decline, BIIB should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.

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