Trade-Ideas LLC identified

Ophthotech

(

OPHT

) as a "perilous reversal" (up big yesterday but down big today) 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 $29.5 million.
  • OPHT has traded 76,283 shares today.
  • OPHT is down 4.5% today.
  • OPHT was up 9.3% yesterday.

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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 8 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 490,400 shares per day over the past 30 days. Ophthotech has a market cap of $1.9 billion and is part of the health care sector and drugs industry. Shares are down 25.8% year-to-date as of the close of trading on Thursday.

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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 deteriorating 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 significantly underperformed when compared to that of the S&P 500 and the Biotechnology industry. The net income has significantly decreased by 647.0% when compared to the same quarter one year ago, falling from $6.64 million to -$36.30 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 decreased to -$36.74 million or 16.60% when compared to the same quarter last year. In addition, when comparing the cash generation rate to the industry average, the firm's growth is significantly lower.
  • OPHTHOTECH CORP 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. 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 67.5% in earnings (-$5.11 versus -$3.05).
  • After a year of stock price fluctuations, the net result is that OPHT's price has not changed very much. Although its weak earnings growth may have played a role in this flat result, don't lose sight of the fact that the performance of the overall market, as measured by the S&P 500 Index, was essentially similar. 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.

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