Perilous Reversal Stock: Sarepta Therapeutics (SRPT)

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

  • SRPT has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $83.0 million.
  • SRPT has traded 159,749 shares today.
  • SRPT is down 5.2% today.
  • SRPT was up 40.1% yesterday.

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More details on SRPT:

Sarepta Therapeutics, Inc., a biopharmaceutical company, focuses on the discovery and development of RNA-based therapeutics for the treatment of rare and infectious diseases. Currently there are 6 analysts that rate Sarepta Therapeutics a buy, 1 analyst rates it a sell, and 7 rate it a hold.

The average volume for Sarepta Therapeutics has been 2.8 million shares per day over the past 30 days. Sarepta has a market cap of $766.3 million and is part of the health care sector and drugs industry. The stock has a beta of 1.32 and a short float of 37.7% with 3.83 days to cover. Shares are down 1.9% year-to-date as of the close of trading on Wednesday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Sarepta Therapeutics as a sell. The company's weaknesses can be seen in multiple areas, such as its weak operating cash flow and generally disappointing historical performance in the stock itself.

Highlights from the ratings report include:
  • Net operating cash flow has significantly decreased to -$19.88 million or 154.68% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
  • SRPT'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 28.90%, 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.
  • The revenue fell significantly faster than the industry average of 10.6%. Since the same quarter one year prior, revenues fell by 45.0%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
  • SAREPTA THERAPEUTICS INC has improved earnings per share by 42.9% 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, SAREPTA THERAPEUTICS INC reported poor results of -$4.95 versus -$0.06 in the prior year. This year, the market expects an improvement in earnings (-$3.79 versus -$4.95).
  • The net income growth from the same quarter one year ago has exceeded that of the Biotechnology industry average, but is less than that of the S&P 500. The net income increased by 15.2% when compared to the same quarter one year prior, going from -$49.55 million to -$42.03 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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