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Trade-Ideas LLC identified

Foundation Medicine

(

FMI

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

  • FMI has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $6.9 million.
  • FMI has traded 85,131 shares today.
  • FMI is trading at 5.23 times the normal volume for the stock at this time of day.
  • FMI is trading at a new low 6.32% below yesterday's close.

'Weak on High Relative Volume' stocks are worth watching because major volume moves tend to indicate underlying activity such as material stock news, analyst downgrades, insider selling, selling from 'superinvestors,' or that hedge funds and traders are piling out of 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 (or avoid losses by trimming weak positions). 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 FMI:

TheStreet Recommends

Foundation Medicine, Inc. provides various molecular information products in the United States. Currently there are 2 analysts that rate Foundation Medicine a buy, no analysts rate it a sell, and 5 rate it a hold.

The average volume for Foundation Medicine has been 326,900 shares per day over the past 30 days. Foundation Medicine has a market cap of $882.6 million and is part of the health care sector and health services industry. Shares are up 8.9% year-to-date as of the close of trading on Tuesday.

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TheStreetRatings.com

Analysis:

TheStreet Quant Ratings

rates Foundation Medicine as a

sell

. The company's weaknesses can be seen in multiple areas, such as its feeble growth in its earnings per share, deteriorating net income and weak operating cash flow.

Highlights from the ratings report include:

  • FOUNDATION MEDICINE 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. Earnings per share have declined over the last year. We anticipate that this should continue in the coming year. During the past fiscal year, FOUNDATION MEDICINE INC reported poor results of -$1.86 versus -$0.94 in the prior year. For the next year, the market is expecting a contraction of 39.2% in earnings (-$2.59 versus -$1.86).
  • 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 139.8% when compared to the same quarter one year ago, falling from -$13.78 million to -$33.05 million.
  • Net operating cash flow has significantly decreased to -$37.25 million or 264.58% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
  • The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. Compared to other companies in the Biotechnology industry and the overall market, FOUNDATION MEDICINE INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • Compared to where it was trading a year ago, FMI's share price has not changed very much due to (a) the relatively weak year-over-year performance of the overall market, (b) the company's stagnant earnings, and (c) other mixed results. Turning our attention to the future direction of the stock, we do not believe this stock offers ample reward opportunity to compensate for the risks, despite the fact that it rose over the past year.

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