Trade-Ideas LLC identified

Merrimack Pharmaceuticals

(

MACK

) as a strong on high relative volume candidate. In addition to specific proprietary factors, Trade-Ideas identified Merrimack Pharmaceuticals as such a stock due to the following factors:

  • MACK has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $10.0 million.
  • MACK has traded 194,166 shares today.
  • MACK is trading at 2.54 times the normal volume for the stock at this time of day.
  • MACK is trading at a new high 3.03% above yesterday's close.

'Strong on High Relative Volume' stocks are worth watching because major volume moves tend to indicate underlying activity such as M&A events, material stock news, analyst upgrades, insider buying, buying from 'superinvestors,' or that hedge funds and momentum traders are piling into a stock ahead of a catalyst. Regardless of the impetus behind the price and volume action, when a stock moves with strength and volume it can indicate the start of a new trend on which early investors can capitalize. In the event of a well-timed trading opportunity, combining technical indicators with fundamental trends and a disciplined trading methodology should help you take the first steps towards investment success.

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More details on MACK:

Merrimack Pharmaceuticals, Inc., a biopharmaceutical company, engages in discovering, developing and commercializing medicines consisting of novel therapeutics paired with diagnostics for the treatment of cancer primarily in the United States. Currently there are 3 analysts that rate Merrimack Pharmaceuticals a buy, no analysts rate it a sell, and 1 rates it a hold.

The average volume for Merrimack Pharmaceuticals has been 1.8 million shares per day over the past 30 days. Merrimack has a market cap of $717.8 million and is part of the health care sector and drugs industry. The stock has a beta of 2.21 and a short float of 25.3% with 13.84 days to cover. Shares are down 29% year-to-date as of the close of trading on Thursday.

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TheStreetRatings.com

Analysis:

TheStreet Quant Ratings

rates Merrimack Pharmaceuticals as a

sell

. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income, weak operating cash flow and generally disappointing historical performance in the stock itself.

Highlights from the ratings report include:

  • The company, on the basis of change in net income from the same quarter one year ago, has underperformed when compared to that of the S&P 500 and greatly underperformed compared to the Biotechnology industry average. The net income has decreased by 10.7% when compared to the same quarter one year ago, dropping from -$34.76 million to -$38.47 million.
  • Net operating cash flow has significantly decreased to -$53.52 million or 52.57% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
  • Looking at the price performance of MACK's shares over the past 12 months, there is not much good news to report: the stock is down 45.53%, and it has underformed the S&P 500 Index. In addition, the company's earnings per share are lower today than the year-earlier quarter. Naturally, the overall market trend is bound to be a significant factor. However, in one sense, the stock's sharp decline last year is a positive for future investors, making it cheaper (in proportion to its earnings over the past year) than most other stocks in its industry. But due to other concerns, we feel the stock is still not a good buy right now.
  • MERRIMACK PHARMACEUTICALS' earnings per share from the most recent quarter came in slightly below the year earlier quarter. The company has reported a trend of declining earnings per share over the past year. However, the consensus estimate suggests that this trend should reverse in the coming year. During the past fiscal year, MERRIMACK PHARMACEUTICALS reported poor results of -$1.32 versus -$0.80 in the prior year. This year, the market expects an improvement in earnings (-$0.82 versus -$1.32).
  • The revenue growth came in higher than the industry average of 20.2%. Since the same quarter one year prior, revenues rose by 43.4%. 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.

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