Get Ready for Nektar Therapeutics (NKTR) Stock to Break Out

A rally to $19 could ensue for Nektar (NKTR) shares.
By Bruce Kamich ,

NEW YORK (TheStreet) -- The chart of Nektar Therapeutics (NKTR) - Get Report is breaking out and should be bought now.

This chart of NKTR, above, shows a "triple bottom" at $10, with prices breaking out on the upside at $14. There is a rising On-Balance-Volume (OBV) line, which is bullish, along with the bullish Moving Average Convergence Divergence oscillator. Prices are breaking out now and the height of the pattern when added to the top of the pattern yields a price target between $18 and $18.50.

This longer-term chart of NKTR, above, shows what could happen if $14 is cleared -- a rally to $19 could ensue.

TheStreet Ratings team rates NEKTAR THERAPEUTICS as a Sell with a ratings score of D-. TheStreet Ratings Team has this to say about their recommendation:

We rate NEKTAR THERAPEUTICS (NKTR) a SELL. This is driven by several weaknesses, which we believe should have a greater impact than any strengths, and could make it more difficult for investors to achieve positive results compared to most of the stocks we cover. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income, disappointing return on equity, poor profit margins, generally high debt management risk and generally disappointing historical performance in the stock itself.

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • 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 111.6% when compared to the same quarter one year ago, falling from $70.61 million to -$8.20 million.
  • Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Pharmaceuticals industry and the overall market, NEKTAR THERAPEUTICS's return on equity significantly trails that of both the industry average and the S&P 500.
  • The gross profit margin for NEKTAR THERAPEUTICS is currently extremely low, coming in at 6.16%. It has decreased significantly from the same period last year. Along with this, the net profit margin of -13.68% is significantly below that of the industry average.
  • The debt-to-equity ratio is very high at 6.49 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. Even though the debt-to-equity ratio is weak, NKTR's quick ratio is somewhat strong at 1.30, demonstrating the ability to handle short-term liquidity needs.
  • The share price of NEKTAR THERAPEUTICS has not done very well: it is down 11.10% and has underperformed the S&P 500, in part reflecting the company's sharply declining earnings per share when compared to the year-earlier quarter. The fact that the stock is now selling for less than others in its industry in relation to its current earnings is not reason enough to justify a buy rating at this time.
  • You can view the full analysis from the report here: NKTR

Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of Jim Cramer, TheStreet or any of its contributors.

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