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

  • HZNP has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $39.6 million.
  • HZNP has traded 50,333 shares today.
  • HZNP is down 3.9% today.
  • HZNP was up 6.4% yesterday.

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More details on HZNP:

Horizon Pharma, Inc., a specialty pharmaceutical company, through its subsidiaries, develops and commercializes medicines for the treatment of arthritis, pain, and inflammatory diseases. Currently there are 4 analysts that rate Horizon Pharma a buy, no analysts rate it a sell, and none rate it a hold.

The average volume for Horizon Pharma has been 2.7 million shares per day over the past 30 days. Horizon has a market cap of $915.1 million and is part of the health care sector and drugs industry. The stock has a beta of 2.11 and a short float of 27.1% with 5.32 days to cover. Shares are up 76.5% year-to-date as of the close of trading on Tuesday.

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 Horizon Pharma as a sell. Among the areas we feel are negative, one of the most important has been generally deteriorating net income.

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 Pharmaceuticals industry. The net income has significantly decreased by 322.9% when compared to the same quarter one year ago, falling from -$24.33 million to -$102.90 million.
  • HORIZON PHARMA INC 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. 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, HORIZON PHARMA INC continued to lose money by earning -$2.29 versus -$2.53 in the prior year. This year, the market expects an improvement in earnings ($0.52 versus -$2.29).
  • The gross profit margin for HORIZON PHARMA INC is currently very high, coming in at 94.07%. It has increased significantly from the same period last year. Regardless of the strong results of the gross profit margin, the net profit margin of -342.09% is in-line with the industry average.
  • Net operating cash flow has increased to -$11.18 million or 34.89% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of 11.22%.
  • Compared to its closing price of one year ago, HZNP's share price has jumped by 516.18%, exceeding the performance of the broader market during that same time frame. Regarding the future course of this stock, we feel that the risks involved in investing in HZNP do not compensate for any future upside potential, despite the fact that it has seen nice gains over the past 12 months.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

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