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 Vivus ( VVUS) as a "barbarian at the gate" (strong stocks crossing above resistance with today's range greater than 200%) candidate. In addition to specific proprietary factors, Trade-Ideas identified Vivus as such a stock due to the following factors:
- VVUS has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $19.9 million.
- VVUS has traded 852,216 shares today.
- VVUS traded in a range 263.2% of the normal price range with a price range of $1.00.
- VVUS traded above its daily resistance level (quality: 11 days, meaning that the stock is crossing a resistance level set by the last 11 calendar days. The resistance price is defined by the Price - $0.01 at the time of the signal).
Stocks matching the 'Barbarian at the Gate' 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 positive price action. In this case, the stock crossed an important inflection point; namely, 'resistance' while at the same time the range of the stock s movement in price is more than twice its normal size. This large range foreshadows a possible continuation as the stock moves higher. EXCLUSIVE OFFER: Get the inside scoop on opportunities in VVUS with the Ticky from Trade-Ideas. See the FREE profile for VVUS NOW at Trade-Ideas More details on VVUS: VIVUS, Inc., a biopharmaceutical company, engages in developing and commercializing therapies to address unmet needs in obesity, sleep apnea, diabetes, and sexual health. Currently there are 4 analysts that rate Vivus a buy, 3 analysts rate it a sell, and 4 rate it a hold. The average volume for Vivus has been 2.5 million shares per day over the past 30 days. Vivus has a market cap of $963.1 million and is part of the health care sector and drugs industry. The stock has a beta of 2.27 and a short float of 32.8% with 15.19 days to cover. Shares are down 28.8% 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 Vivus 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, disappointing return on equity, weak operating cash flow and generally high debt management risk. Highlights from the ratings report include:
- VIVUS INC has exprienced 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 two years. We anticipate that this should continue in the coming year. During the past fiscal year, VIVUS INC reported poor results of -$1.40 versus -$0.56 in the prior year. For the next year, the market is expecting a contraction of 42.1% in earnings (-$1.99 versus -$1.40).
- 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 Pharmaceuticals industry. The net income has significantly decreased by 130.8% when compared to the same quarter one year ago, falling from -$24.05 million to -$55.51 million.
- 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 Pharmaceuticals industry and the overall market, VIVUS INC's return on equity significantly trails that of both the industry average and the S&P 500.
- Net operating cash flow has significantly decreased to -$48.21 million or 109.53% 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 debt-to-equity ratio of 1.11 is relatively high when compared with the industry average, suggesting a need for better debt level management. Despite the company's weak debt-to-equity ratio, the company has managed to keep a very strong quick ratio of 10.19, which shows the ability to cover short-term cash needs.
- You can view the full Vivus 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.