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Strong On High Relative Volume: Theravance (THRX)

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 Theravance ( THRX) as a strong on high relative volume candidate. In addition to specific proprietary factors, Trade-Ideas identified Theravance as such a stock due to the following factors:

  • THRX has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $10.5 million.
  • THRX has traded 71,514 shares today.
  • THRX is trading at 2.26 times the normal volume for the stock at this time of day.
  • THRX is trading at a new high 4.12% above yesterday's close.

'Strong on High Relative Volume' stocks are worth watching because major volume moves tend to indicate underlying activity such as M&A events, material stock news, analyst upgrades, insider buying, buying from 'superinvestors,' or that hedge funds and momentum traders are piling into a stock ahead of a catalyst. Regardless of the impetus behind the price and volume action, when a stock moves with strength and volume it can indicate the start of a new trend on which early investors can capitalize. In the event of a well-timed trading opportunity, combining technical indicators with fundamental trends and a disciplined trading methodology should help you take the first steps towards investment success.

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

More details on THRX:

Theravance, Inc., a royalty management company, is focused on developing respiratory products. The stock currently has a dividend yield of 1.1%. Currently there are 2 analysts that rate Theravance a buy, 1 analyst rates it a sell, and 3 rate it a hold.

The average volume for Theravance has been 1.2 million shares per day over the past 30 days. Theravance has a market cap of $2.5 billion and is part of the health care sector and drugs industry. The stock has a beta of 0.72 and a short float of 45.5% with 49.28 days to cover. Shares are down 36.7% year-to-date as of the close of trading on Monday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Theravance 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:

  • THERAVANCE 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. Earnings per share have declined over the last year. We anticipate that this should continue in the coming year. During the past fiscal year, THERAVANCE INC reported poor results of -$1.03 versus -$0.19 in the prior year. For the next year, the market is expecting a contraction of 14.6% in earnings (-$1.18 versus -$1.03).
  • 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 74.5% when compared to the same quarter one year ago, falling from -$36.43 million to -$63.56 million.
  • Net operating cash flow has significantly decreased to -$54.41 million or 226.05% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
  • Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 39.30%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 800.00% compared to 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.
  • THRX, with its decline in revenue, underperformed when compared the industry average of 4.6%. Since the same quarter one year prior, revenues fell by 29.3%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.

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