Trade-Ideas LLC identified

Ophthotech

(

OPHT

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

  • OPHT has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $27.4 million.
  • OPHT has traded 81,764 shares today.
  • OPHT is trading at 3.38 times the normal volume for the stock at this time of day.
  • OPHT is trading at a new low 3.40% below yesterday's close.

'Weak on High Relative Volume' stocks are worth watching because major volume moves tend to indicate underlying activity such as material stock news, analyst downgrades, insider selling, selling from 'superinvestors,' or that hedge funds and traders are piling out of 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 (or avoid losses by trimming weak positions). 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 OPHT:

Ophthotech Corporation, a biopharmaceutical company, develops novel therapeutics to treat diseases of the back of the eye. Currently there are 7 analysts that rate Ophthotech a buy, no analysts rate it a sell, and 1 rates it a hold.

The average volume for Ophthotech has been 641,000 shares per day over the past 30 days. Ophthotech has a market cap of $1.6 billion and is part of the health care sector and drugs industry. Shares are down 38.1% year-to-date as of the close of trading on Wednesday.

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TheStreetRatings.com

Analysis:

TheStreet Quant Ratings

rates Ophthotech as a

sell

. The company's weaknesses can be seen in multiple areas, such as its unimpressive growth in net income, disappointing return on equity, weak operating cash flow and feeble growth in its earnings per share.

Highlights from the ratings report include:

  • The company, on the basis of change in net income from the same quarter one year ago, has underperformed when compared to that of the S&P 500 and greatly underperformed compared to the Biotechnology industry average. The net income has decreased by 12.6% when compared to the same quarter one year ago, dropping from -$31.65 million to -$35.65 million.
  • 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. Compared to other companies in the Biotechnology industry and the overall market, OPHTHOTECH CORP's return on equity significantly trails that of both the industry average and the S&P 500.
  • Net operating cash flow has significantly decreased to -$39.04 million or 462.55% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
  • OPHTHOTECH CORP's earnings per share declined by 8.5% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. We feel it is likely to report a decline in earnings in the coming year. During the past fiscal year, OPHTHOTECH CORP continued to lose money by earning -$3.05 versus -$3.52 in the prior year. For the next year, the market is expecting a contraction of 82.3% in earnings (-$5.56 versus -$3.05).
  • Compared to where it was trading a year ago, OPHT's share price has not changed very much due to (a) the relatively weak year-over-year performance of the overall market, (b) the company's stagnant earnings, and (c) other mixed results. 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.

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