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 Medivation ( MDVN) as a "water-logged and getting wetter" (weak stocks crossing below support with today's range greater than 200%) candidate. In addition to specific proprietary factors, Trade-Ideas identified Medivation as such a stock due to the following factors:
- MDVN has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $42.2 million.
- MDVN has traded 409,674 shares today.
- MDVN traded in a range 234.3% of the normal price range with a price range of $3.54.
- MDVN traded below its daily resistance level (quality: 5 days, meaning that the stock is crossing a resistance level set by the last 5 calendar days. The resistance price is defined by the Price - $0.01 at the time of the signal).
Stocks matching the 'Water-Logged and Getting Wetter' criteria are worthwhile stocks to watch for a variety of factors including historical back testing and volatility. Trade-Ideas targets these opportunities because the stock is exhibiting an unusual behavior while displaying negative price action. In this case, the stock crossed an important inflection point; namely, "support" while at the same time the range of the stock's movement in price is twice its normal size. This large range foreshadows a possible continuation as the stock moves lower. EXCLUSIVE OFFER: Get the inside scoop on opportunities in MDVN with the Ticky from Trade-Ideas. See the FREE profile for MDVN NOW at Trade-Ideas More details on MDVN: Medivation, Inc., a biopharmaceutical company, focuses on development and commercialization of novel therapies to treat serious diseases in the United States. It offers XTANDI for the treatment of post-chemotherapy metastatic castration-resistant prostate cancer (mCRPC) patients. Currently there are 10 analysts that rate Medivation a buy, no analysts rate it a sell, and 3 rate it a hold. The average volume for Medivation has been 972,000 shares per day over the past 30 days. Medivation has a market cap of $4.4 billion and is part of the health care sector and drugs industry. The stock has a beta of 1.21 and a short float of 5.4% with 4.65 days to cover. Shares are up 13.4% year to date as of the close of trading on Wednesday. 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 Medivation as a sell. The company's weaknesses can be seen in multiple areas, such as its disappointing return on equity, poor profit margins, feeble growth in its earnings per share and generally high debt management risk. Highlights from the ratings report include:
- 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 Biotechnology industry and the overall market, MEDIVATION INC's return on equity significantly trails that of both the industry average and the S&P 500.
- The gross profit margin for MEDIVATION INC is currently extremely low, coming in at 1.33%. Regardless of MDVN's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, MDVN's net profit margin of -6.98% significantly underperformed when compared to the industry average.
- MEDIVATION INC has improved earnings per share by 6.7% in the most recent quarter compared to the same quarter a year ago. Stable earnings per share over the past year indicate the company has managed its earnings and share float. We anticipate this stability to falter in the coming year and, in turn, the company to deliver lower earnings per share than prior full year. During the past fiscal year, MEDIVATION INC reported poor results of -$0.56 versus -$0.56 in the prior year. For the next year, the market is expecting a contraction of 60.7% in earnings (-$0.90 versus -$0.56).
- The debt-to-equity ratio is very high at 3.28 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 3.58, which shows the ability to cover short-term cash needs.
- The stock has risen over the past year and, it has performed in line with the S&P 500 thus far. 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.
- You can view the full Medivation Ratings Report.
STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12-months. Learn more.