Trade-Ideas: Medidata Solutions (MDSO) Is Today's "Dead Cat Bounce" Stock - TheStreet

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

Trade-Ideas LLC identified

Medidata Solutions

(

MDSO

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

  • MDSO has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $30.2 million.
  • MDSO has traded 288,540 shares today.
  • MDSO is up 3% today.
  • MDSO was down 7.2% yesterday.

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More details on MDSO:

Medidata Solutions, Inc. provides cloud-based clinical development solutions for life sciences in the United States and internationally. MDSO has a PE ratio of 358.9. Currently there are 10 analysts that rate Medidata Solutions a buy, no analysts rate it a sell, and none rate it a hold.

The average volume for Medidata Solutions has been 448,100 shares per day over the past 30 days. Medidata has a market cap of $2.3 billion and is part of the technology sector and computer software & services industry. The stock has a beta of 0.93 and a short float of 9.9% with 7.17 days to cover. Shares are down 33.9% year-to-date as of the close of trading on Tuesday.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

TheStreetRatings.com

Analysis:

TheStreet Quant Ratings

rates Medidata Solutions as a

hold

. The company's strengths can be seen in multiple areas, such as its robust revenue growth and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, disappointing return on equity and weak operating cash flow.

Highlights from the ratings report include:

  • MDSO's revenue growth has slightly outpaced the industry average of 16.0%. Since the same quarter one year prior, revenues rose by 22.3%. 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.
  • The gross profit margin for MEDIDATA SOLUTIONS INC is currently very high, coming in at 77.93%. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of 2.75% trails the industry average.
  • MEDIDATA SOLUTIONS 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. The company has reported a trend of declining earnings per share over the past two years. However, the consensus estimate suggests that this trend should reverse in the coming year. During the past fiscal year, MEDIDATA SOLUTIONS INC reported lower earnings of $0.32 versus $0.35 in the prior year. This year, the market expects an improvement in earnings ($0.76 versus $0.32).
  • 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 Health Care Technology industry and the overall market on the basis of return on equity, MEDIDATA SOLUTIONS INC underperformed against that of the industry average and is significantly less than that of the S&P 500.
  • 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 Health Care Technology industry. The net income has significantly decreased by 55.0% when compared to the same quarter one year ago, falling from $5.11 million to $2.30 million.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

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