Trade-Ideas LLC identified

Incyte

(

INCY

) as a "roof leaker" (crossing below the 200-day simple moving average on higher than normal relative volume) candidate. In addition to specific proprietary factors, Trade-Ideas identified Incyte as such a stock due to the following factors:

  • INCY has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $135.8 million.
  • INCY has traded 848,859 shares today.
  • INCY is trading at 2.98 times the normal volume for the stock at this time of day.
  • INCY crossed below its 200-day simple moving average.

'Roof Leaker' stocks are worth watching because trading stocks that begin to experience a breakdown can lead to potentially massive losses. Once psychological and technical resistance barriers like the 200-day moving average are breached on higher than normal relative volume, the stock may then be subject to emotional selling from investors that can continue to drive the stock lower. Regardless of the impetus behind the price and volume action, when a stock moves with weakness and volume it can indicate the start of a new, potentially dangerous, trend.

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More details on INCY:

Incyte Corporation, a biopharmaceutical company, focuses on the discovery, development, and commercialization of proprietary therapeutics primarily for oncology. INCY has a PE ratio of 1244. Currently there are 11 analysts that rate Incyte a buy, no analysts rate it a sell, and none rate it a hold.

The average volume for Incyte has been 1.3 million shares per day over the past 30 days. Incyte has a market cap of $20.2 billion and is part of the health care sector and drugs industry. The stock has a beta of -0.13 and a short float of 2.8% with 2.74 days to cover. Shares are up 45.8% year-to-date as of the close of trading on Friday.

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TheStreetRatings.com

Analysis:

TheStreet Quant Ratings

rates Incyte as a

hold

. The company's strengths can be seen in multiple areas, such as its notable return on equity, robust revenue growth and impressive record of earnings per share growth. However, as a counter to these strengths, we also find weaknesses including poor profit margins and generally higher debt management risk.

Highlights from the ratings report include:

  • When compared to other companies in the Biotechnology industry and the overall market, INCYTE CORP's return on equity exceeds that of the industry average and significantly exceeds that of the S&P 500.
  • INCY's very impressive revenue growth greatly exceeded the industry average of 8.9%. Since the same quarter one year prior, revenues leaped by 63.7%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • INCYTE CORP reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. This trend suggests that the performance of the business is improving. During the past fiscal year, INCYTE CORP continued to lose money by earning -$0.32 versus -$0.54 in the prior year. This year, the market expects an improvement in earnings (-$0.18 versus -$0.32).
  • The debt-to-equity ratio is very high at 11.96 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. Despite the company's weak debt-to-equity ratio, the company has managed to keep a very strong quick ratio of 3.65, which shows the ability to cover short-term cash needs.
  • The gross profit margin for INCYTE CORP is currently extremely low, coming in at 2.38%. Despite the low profit margin, it has increased significantly from the same period last year. Despite the mixed results of the gross profit margin, INCY's net profit margin of 5.70% is significantly lower than the industry average.

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