Roof Leaker To Watch: Alexion Pharmaceuticals (ALXN)
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.
Trade-Ideas LLC identified
(
) as a "roof leaker" (crossing below the 200-day simple moving average on higher than normal relative volume) candidate. In addition to specific proprietary factors, Trade-Ideas identified Alexion Pharmaceuticals as such a stock due to the following factors:
- ALXN has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $257.8 million.
- ALXN has traded 875,457 shares today.
- ALXN is trading at 1.59 times the normal volume for the stock at this time of day.
- ALXN crossed below its 200-day simple moving average.
'Roof Leaker' stocks are worth watching because trading stocks that begin to experience a breakdown can lead to potentially massive losses. Once psychological and technical resistance barriers like the 200-day moving average are breached on higher than normal relative volume, the stock may then be subject to emotional selling from investors that can continue to drive the stock lower. Regardless of the impetus behind the price and volume action, when a stock moves with weakness and volume it can indicate the start of a new, potentially dangerous, trend.
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More details on ALXN:
Alexion Pharmaceuticals, Inc., a biopharmaceutical company, develops and commercializes life-transforming therapeutic products. ALXN has a PE ratio of 55.4. Currently there are 14 analysts that rate Alexion Pharmaceuticals a buy, no analysts rate it a sell, and 2 rate it a hold.
The average volume for Alexion Pharmaceuticals has been 1.3 million shares per day over the past 30 days. Alexion has a market cap of $36.5 billion and is part of the health care sector and drugs industry. The stock has a beta of 1.21 and a short float of 2.1% with 2.25 days to cover. Shares are down 2.6% year-to-date as of the close of trading on Monday.
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Analysis:
rates Alexion Pharmaceuticals as a
. The company's strengths can be seen in multiple areas, such as its impressive record of earnings per share growth, compelling growth in net income, robust revenue growth, largely solid financial position with reasonable debt levels by most measures and expanding profit margins. Although no company is perfect, currently we do not see any significant weaknesses which are likely to detract from the generally positive outlook.
Highlights from the ratings report include:
- ALEXION PHARMACEUTICALS 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. We feel that this trend should continue. During the past fiscal year, ALEXION PHARMACEUTICALS INC increased its bottom line by earning $3.26 versus $1.26 in the prior year. This year, the market expects an improvement in earnings ($5.80 versus $3.26).
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Biotechnology industry. The net income increased by 907.4% when compared to the same quarter one year prior, rising from -$18.99 million to $153.33 million.
- Despite its growing revenue, the company underperformed as compared with the industry average of 36.0%. Since the same quarter one year prior, revenues rose by 35.6%. Growth in the company's revenue appears to have helped boost the earnings per share.
- ALXN's debt-to-equity ratio is very low at 0.05 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Along with this, the company maintains a quick ratio of 3.95, which clearly demonstrates the ability to cover short-term cash needs.
- The gross profit margin for ALEXION PHARMACEUTICALS INC is currently very high, coming in at 94.70%. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of 25.57% trails the industry average.
- You can view the full Alexion Pharmaceuticals Ratings Report.
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