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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

Foundation Medicine

(

FMI

) as a strong on high relative volume candidate. In addition to specific proprietary factors, Trade-Ideas identified Foundation Medicine as such a stock due to the following factors:

  • FMI has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $10.6 million.
  • FMI has traded 59,050 shares today.
  • FMI is trading at 4.97 times the normal volume for the stock at this time of day.
  • FMI is trading at a new high 5.03% above yesterday's close.

'Strong on High Relative Volume' stocks are worth watching because major volume moves tend to indicate underlying activity such as M&A events, material stock news, analyst upgrades, insider buying, buying from 'superinvestors,' or that hedge funds and momentum traders are piling into a stock ahead of a catalyst. Regardless of the impetus behind the price and volume action, when a stock moves with strength and volume it can indicate the start of a new trend on which early investors can capitalize. In the event of a well-timed trading opportunity, combining technical indicators with fundamental trends and a disciplined trading methodology should help you take the first steps towards investment success.

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More details on FMI:

TheStreet Recommends

Foundation Medicine, Inc. provides various molecular information products in the United States. Currently there are 2 analysts that rate Foundation Medicine a buy, no analysts rate it a sell, and 5 rate it a hold.

The average volume for Foundation Medicine has been 266,900 shares per day over the past 30 days. Foundation Medicine has a market cap of $764.1 million and is part of the health care sector and health services industry. Shares are down 8.7% year-to-date as of the close of trading on Friday.

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TheStreetRatings.com

Analysis:

TheStreet Quant Ratings

rates Foundation Medicine as a

sell

. The company's weaknesses can be seen in multiple areas, such as its feeble growth in its earnings per share, deteriorating net income and generally disappointing historical performance in the stock itself.

Highlights from the ratings report include:

  • FOUNDATION MEDICINE INC has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. Earnings per share have declined over the last year. We anticipate that this should continue in the coming year. During the past fiscal year, FOUNDATION MEDICINE INC reported poor results of -$1.86 versus -$0.94 in the prior year. For the next year, the market is expecting a contraction of 33.6% in earnings (-$2.49 versus -$1.86).
  • 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 Biotechnology industry. The net income has significantly decreased by 139.8% when compared to the same quarter one year ago, falling from -$13.78 million to -$33.05 million.
  • In its most recent trading session, FMI 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. 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, FOUNDATION MEDICINE INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • The gross profit margin for FOUNDATION MEDICINE INC is rather high; currently it is at 60.15%. Regardless of FMI's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, FMI's net profit margin of -147.16% significantly underperformed when compared to the industry average.

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