Orexigen Therapeutics (OREX) In A Perilous Reversal
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
(
) as a "perilous reversal" (up big yesterday but down big today) candidate. In addition to specific proprietary factors, Trade-Ideas identified Orexigen Therapeutics as such a stock due to the following factors:
- OREX has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $124.6 million.
- OREX has traded 2.7 million shares today.
- OREX is down 3.3% today.
- OREX was up 11.1% yesterday.
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More details on OREX:
Orexigen Therapeutics, Inc., a biopharmaceutical company, focuses on the development of pharmaceutical product candidates for the treatment of obesity. Currently there are 6 analysts that rate Orexigen Therapeutics a buy, no analysts rate it a sell, and none rate it a hold.
The average volume for Orexigen Therapeutics has been 3.9 million shares per day over the past 30 days. Orexigen has a market cap of $945.3 million and is part of the health care sector and drugs industry. The stock has a beta of 2.68 and a short float of 41.8% with 2.52 days to cover. Shares are up 40.1% year-to-date as of the close of trading on Wednesday.
Analysis:
rates Orexigen Therapeutics as a
. The company's weaknesses can be seen in multiple areas, such as its poor profit margins, generally disappointing historical performance in the stock itself and generally high debt management risk.
Highlights from the ratings report include:
- The gross profit margin for OREXIGEN THERAPEUTICS INC is currently extremely low, coming in at 10.39%. Despite the low profit margin, it has increased significantly from the same period last year. Despite the mixed results of the gross profit margin, OREX's net profit margin of 2.64% is significantly lower than the industry average.
- The debt-to-equity ratio is very high at 3.76 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. Despite the company's weak debt-to-equity ratio, the company has managed to keep a very strong quick ratio of 7.00, which shows the ability to cover short-term cash needs.
- OREX has underperformed the S&P 500 Index, declining 20.47% from its price level of one year ago. 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.
- The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. Compared to other companies in the Biotechnology industry and the overall market, OREXIGEN THERAPEUTICS INC's return on equity significantly trails that of both the industry average and the S&P 500.
- OREXIGEN THERAPEUTICS INC reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. However, we anticipate underperformance relative to this pattern in the coming year. During the past fiscal year, OREXIGEN THERAPEUTICS INC continued to lose money by earning -$0.35 versus -$0.80 in the prior year. For the next year, the market is expecting a contraction of 72.8% in earnings (-$0.61 versus -$0.35).
- You can view the full Orexigen Therapeutics Ratings Report.
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