Trade-Ideas: Orexigen Therapeutics (OREX) 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.
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 $78.6 million.
- OREX has traded 399,869 shares today.
- OREX is down 4.2% today.
- OREX was up 7.9% 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 5.1 million shares per day over the past 30 days. Orexigen has a market cap of $863.6 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 43.5% with 3.66 days to cover. Shares are up 24.3% year-to-date as of the close of trading on Tuesday.
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Analysis:
rates Orexigen Therapeutics as a
. The company's weaknesses can be seen in multiple areas, such as its poor profit margins 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.
- 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.
- In its most recent trading session, OREX has closed at a price level that was not very different from its closing price of one year earlier. This is probably due to its weak earnings growth as well as other mixed factors. Turning our attention to the future direction of the stock, we do not believe this stock offers ample reward opportunity to compensate for the risks, despite the fact that it rose over the past year.
- 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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