Trade-Ideas LLC identified

Akorn

(

AKRX

) as a "perilous reversal" (up big yesterday but down big today) candidate. In addition to specific proprietary factors, Trade-Ideas identified Akorn as such a stock due to the following factors:

  • AKRX has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $29.0 million.
  • AKRX has traded 298,820 shares today.
  • AKRX is down 3.2% today.
  • AKRX was up 5.3% yesterday.

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More details on AKRX:

Akorn, Inc. develops, manufactures, and markets generic and branded prescription pharmaceuticals, as well as animal and over-the-counter (OTC) consumer health products in the United States and internationally. It operates through two segments, Prescription Pharmaceuticals and Consumer Health. AKRX has a PE ratio of 77. Currently there are 9 analysts that rate Akorn a buy, no analysts rate it a sell, and 5 rate it a hold.

The average volume for Akorn has been 1.7 million shares per day over the past 30 days. Akorn has a market cap of $3.0 billion and is part of the health care sector and drugs industry. The stock has a beta of 1.76 and a short float of 13.7% with 9.97 days to cover. Shares are down 26.6% year-to-date as of the close of trading on Friday.

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TheStreetRatings.com

Analysis:

TheStreet Quant Ratings

rates Akorn as a

hold

. The company's strengths can be seen in multiple areas, such as its robust revenue growth, expanding profit margins and good cash flow from operations. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself, disappointing return on equity and generally higher debt management risk.

Highlights from the ratings report include:

  • AKRX's very impressive revenue growth greatly exceeded the industry average of 6.4%. Since the same quarter one year prior, revenues leaped by 168.2%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • The gross profit margin for AKORN INC is rather high; currently it is at 62.95%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 15.02% is above that of the industry average.
  • AKORN INC reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, AKORN INC reported lower earnings of $0.29 versus $0.46 in the prior year. This year, the market expects an improvement in earnings ($1.96 versus $0.29).
  • 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. When compared to other companies in the Pharmaceuticals industry and the overall market, AKORN INC's return on equity is below that of both the industry average and the S&P 500.
  • AKRX's stock share price has done very poorly compared to where it was a year ago: Despite any rallies, the net result is that it is down by 43.95%, which is also worse that the performance of the S&P 500 Index. Investors have so far failed to pay much attention to the earnings improvements the company has managed to achieve over the last quarter. Although its share price is down sharply from a year ago, do not assume that it can now be tagged as cheap and attractive. The reality is that, based on its current price in relation to its earnings, AKRX is still more expensive than most of the other companies in its industry.

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