Trade-Ideas LLC identified

Cempra

(

CEMP

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

  • CEMP has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $22.7 million.
  • CEMP has traded 214,748 shares today.
  • CEMP is down 3.2% today.
  • CEMP was up 8.9% yesterday.

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More details on CEMP:

Cempra, Inc., a clinical-stage pharmaceutical company, focuses on developing antibiotics to meet medical needs in the treatment of bacterial infectious diseases in North America. Currently there are 8 analysts that rate Cempra a buy, no analysts rate it a sell, and 1 rates it a hold.

The average volume for Cempra has been 1.8 million shares per day over the past 30 days. Cempra has a market cap of $1.3 billion and is part of the health care sector and drugs industry. The stock has a beta of 0.73 and a short float of 28.5% with 12.74 days to cover. Shares are up 34% year-to-date as of the close of trading on Tuesday.

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TheStreetRatings.com

Analysis:

TheStreet Quant Ratings

rates Cempra 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 weak operating cash flow.

Highlights from the ratings report include:

  • CEMPRA 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 two years. We anticipate that this should continue in the coming year. During the past fiscal year, CEMPRA INC reported poor results of -$1.80 versus -$1.50 in the prior year. For the next year, the market is expecting a contraction of 23.9% in earnings (-$2.23 versus -$1.80).
  • 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 Pharmaceuticals industry. The net income has significantly decreased by 142.8% when compared to the same quarter one year ago, falling from -$11.36 million to -$27.57 million.
  • Net operating cash flow has significantly decreased to -$22.21 million or 338.18% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
  • 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 Pharmaceuticals industry and the overall market, CEMPRA INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • CEMP, with its very weak revenue results, has greatly underperformed against the industry average of 3.3%. Since the same quarter one year prior, revenues plummeted by 67.8%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.

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