Roof Leaker To Watch: Biomarin Pharmaceutical (BMRN)

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 Biomarin Pharmaceutical ( BMRN) as a "roof leaker" (crossing below the 200-day simple moving average on higher than normal relative volume) candidate. In addition to specific proprietary factors, Trade-Ideas identified Biomarin Pharmaceutical as such a stock due to the following factors:

  • BMRN has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $67.7 million.
  • BMRN has traded 163,671 shares today.
  • BMRN is trading at 1.57 times the normal volume for the stock at this time of day.
  • BMRN crossed below its 200-day simple moving average.

'Roof Leaker' stocks are worth watching because trading stocks that begin to experience a breakdown can lead to potentially massive losses. Once psychological and technical resistance barriers like the 200-day moving average are breached on higher than normal relative volume, the stock may then be subject to emotional selling from investors that can continue to drive the stock lower. Regardless of the impetus behind the price and volume action, when a stock moves with weakness and volume it can indicate the start of a new, potentially dangerous, trend.

EXCLUSIVE OFFER: Get the inside scoop on opportunities in BMRN with the Ticky from Trade-Ideas. See the FREE profile for BMRN NOW at Trade-Ideas

More details on BMRN:

BioMarin Pharmaceutical Inc. develops and commercializes biopharmaceuticals for serious diseases and medical conditions in the United States, Europe, Latin America, and internationally. Currently there are 11 analysts that rate Biomarin Pharmaceutical a buy, no analysts rate it a sell, and 6 rate it a hold.

The average volume for Biomarin Pharmaceutical has been 1.2 million shares per day over the past 30 days. Biomarin has a market cap of $9.6 billion and is part of the health care sector and drugs industry. Shares are down 3.1% 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 Biomarin Pharmaceutical as a hold. The company's strengths can be seen in multiple areas, such as its solid stock price performance, revenue growth and largely solid financial position with reasonable debt levels by most measures. However, as a counter to these strengths, we also find weaknesses including feeble growth in the company's earnings per share, deteriorating net income and disappointing return on equity.

Highlights from the ratings report include:
  • Compared to its closing price of one year ago, BMRN's share price has jumped by 28.41%, exceeding the performance of the broader market during that same time frame. Regarding the stock's future course, our hold rating indicates that we do not recommend additional investment in this stock despite its gains in the past year.
  • Despite its growing revenue, the company underperformed as compared with the industry average of 11.1%. Since the same quarter one year prior, revenues slightly increased by 6.8%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • The gross profit margin for BIOMARIN PHARMACEUTICAL INC is currently very high, coming in at 88.69%. Regardless of BMRN's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, BMRN's net profit margin of -38.73% significantly underperformed when compared to the industry average.
  • BIOMARIN PHARMACEUTICAL INC has experienced 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, BIOMARIN PHARMACEUTICAL INC reported poor results of -$0.95 versus -$0.48 in the prior year. For the next year, the market is expecting a contraction of 24.8% in earnings (-$1.19 versus -$0.95).
  • 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 Biotechnology industry. The net income has significantly decreased by 889.7% when compared to the same quarter one year ago, falling from -$5.36 million to -$53.02 million.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.
null

If you liked this article you might like

Regeneron, BioMarin, AbbVie Could Explode 20% or More -- Analyst

Trump's FDA: A Friendlier Biotech Sheriff

Arena Pharma's Stock Could Still Double Even After Tuesday's Epic Run

Why I Hate the FAANGs (but Like Banks and Biotech) for 2017's Second Half

3 Fearless Predictions for the Second Half