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

  • DNDN has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $13.0 million.
  • DNDN has traded 5.6 million shares today.
  • DNDN is down 3.1% today.
  • DNDN was up 9.7% yesterday.

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More details on DNDN:

Dendreon Corporation, a biotechnology company, engages in the discovery, development, and commercialization of novel therapeutics to enhance cancer treatment options for patients. Currently there is 1 analyst that rates Dendreon a buy, 8 analysts rate it a sell, and 8 rate it a hold.

The average volume for Dendreon has been 4.3 million shares per day over the past 30 days. Dendreon has a market cap of $423.6 million and is part of the health care sector and drugs industry. The stock has a beta of 3.61 and a short float of 38.4% with 13.18 days to cover. Shares are down 49.1% 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 Dendreon as a sell. Among the areas we feel are negative, one of the most important has been a generally disappointing historical performance in the stock itself.

Highlights from the ratings report include:
  • DNDN's stock share price has done very poorly compared to where it was a year ago: Despite any rallies, the net result is that it is down by 38.37%, which is also worse that the performance of the S&P 500 Index. Investors have so far failed to pay much attention to the earnings improvements the company has managed to achieve over the last 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.
  • DNDN, with its decline in revenue, underperformed when compared the industry average of 10.4%. Since the same quarter one year prior, revenues fell by 12.8%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
  • 42.91% is the gross profit margin for DENDREON CORP which we consider to be strong. Regardless of DNDN's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, DNDN's net profit margin of -98.84% significantly underperformed when compared to the industry average.
  • DENDREON CORP reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, DENDREON CORP reported poor results of -$2.65 versus -$2.31 in the prior year. This year, the market expects an improvement in earnings (-$1.74 versus -$2.65).
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Biotechnology industry. The net income increased by 56.6% when compared to the same quarter one year prior, rising from -$154.86 million to -$67.22 million.

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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