Trade-Ideas LLC identified

DepoMed

(

DEPO

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

  • DEPO has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $39.3 million.
  • DEPO has traded 91,056 shares today.
  • DEPO is up 6.5% today.
  • DEPO was down 12.5% yesterday.

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More details on DEPO:

Depomed, Inc., a specialty pharmaceutical company, develops products for pain and other central nervous system conditions in the United States. DEPO has a PE ratio of 23. Currently there is 1 analyst that rates DepoMed a buy, no analysts rate it a sell, and 2 rate it a hold.

The average volume for DepoMed has been 1.9 million shares per day over the past 30 days. DepoMed has a market cap of $1.4 billion and is part of the health care sector and drugs industry. The stock has a beta of 1.79 and a short float of 19.1% with 4.22 days to cover. Shares are up 10% year-to-date as of the close of trading on Monday.

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TheStreetRatings.com

Analysis:

TheStreet Quant Ratings

rates DepoMed as a

buy

. The company's strengths can be seen in multiple areas, such as its robust revenue growth, reasonable valuation levels, solid stock price performance, good cash flow from operations and expanding profit margins. We feel its strengths outweigh the fact that the company has had sub par growth in net income.

Highlights from the ratings report include:

  • The revenue growth greatly exceeded the industry average of 6.7%. Since the same quarter one year prior, revenues rose by 39.5%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • Compared to its closing price of one year ago, DEPO's share price has jumped by 46.16%, exceeding the performance of the broader market during that same time frame. Regarding the stock's future course, although almost any stock can fall in a broad market decline, DEPO should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
  • Net operating cash flow has significantly increased by 471.20% to $39.57 million when compared to the same quarter last year. In addition, DEPOMED INC has also vastly surpassed the industry average cash flow growth rate of -10.20%.
  • The gross profit margin for DEPOMED INC is currently very high, coming in at 81.73%. Despite the high profit margin, it has decreased significantly from the same period last year. Despite the mixed results of the gross profit margin, DEPO's net profit margin of -22.91% significantly underperformed when compared to the industry average.

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