Geron Corporation (GERN) Is Today's Perilous Reversal Stock

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 Geron Corporation ( GERN) as a "perilous reversal" (up big yesterday but down big today) candidate. In addition to specific proprietary factors, Trade-Ideas identified Geron Corporation as such a stock due to the following factors:

  • GERN has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $34.9 million.
  • GERN is down 7.5% today.
  • GERN was up 44.7% yesterday.

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More details on GERN:

Geron Corporation is a clinical stage biopharmaceutical company developing a first-in-class telomerase inhibitor, imetelstat, in hematologic myeloid malignancies. The company was founded in 1990 and is based in Menlo Park, California. Currently there is 1 analyst that rates Geron Corporation a buy, 1 analyst rates it a sell, and 2 rate it a hold.

The average volume for Geron Corporation has been 2.5 million shares per day over the past 30 days. Geron has a market cap of $499.2 million and is part of the health care sector and drugs industry. The stock has a beta of 2.24 and a short float of 5.2% with 0.93 days to cover. Shares are up 175.2% year to date as of the close of trading on Wednesday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Geron Corporation as a sell. The area that we feel has been the company's primary weakness has been its meager revenue growth.

Highlights from the ratings report include:
  • The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Biotechnology industry and the overall market, GERON CORP's return on equity significantly trails that of both the industry average and the S&P 500.
  • GERN, with its decline in revenue, underperformed when compared the industry average of 11.8%. Since the same quarter one year prior, revenues fell by 13.8%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
  • GERN has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign. Along with this, the company maintains a quick ratio of 14.40, which clearly demonstrates the ability to cover short-term cash needs.
  • This stock has increased by 196.99% over the past year, outperforming the rise in the S&P 500 Index during the same period. Regarding the future course of this stock, we feel that the risks involved in investing in GERN do not compensate for any future upside potential, despite the fact that it has seen nice gains over the past 12 months.
  • GERON CORP reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. This trend suggests that the performance of the business is improving. During the past fiscal year, GERON CORP continued to lose money by earning -$0.54 versus -$0.78 in the prior year. This year, the market expects an improvement in earnings (-$0.29 versus -$0.54).

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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