Medicines (MDCO) Marked As A Dead Cat Bounce 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 Medicines ( MDCO) as a "dead cat bounce" (down big yesterday but up big today) candidate. In addition to specific proprietary factors, Trade-Ideas identified Medicines as such a stock due to the following factors:

  • MDCO has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $37.8 million.
  • MDCO has traded 70,950 shares today.
  • MDCO is up 4.1% today.
  • MDCO was down 5.3% yesterday.

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More details on MDCO:

The Medicines Company provides medical solutions for patients in acute and intensive care hospitals worldwide. MDCO has a PE ratio of 55.2. Currently there are 5 analysts that rate Medicines a buy, no analysts rate it a sell, and 1 rates it a hold.

The average volume for Medicines has been 725,200 shares per day over the past 30 days. Medicines has a market cap of $2.2 billion and is part of the health care sector and drugs industry. The stock has a beta of 1.27 and a short float of 6.9% with 3.01 days to cover. Shares are down 16.1% year-to-date as of the close of trading on Monday.

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 Medicines as a buy. The company's strengths can be seen in multiple areas, such as its robust revenue growth, largely solid financial position with reasonable debt levels by most measures, good cash flow from operations, expanding profit margins and increase in stock price during the past year. We feel these strengths outweigh the fact that the company has had somewhat weak growth in earnings per share.

Highlights from the ratings report include:
  • The revenue growth came in higher than the industry average of 3.8%. Since the same quarter one year prior, revenues rose by 27.4%. 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.
  • MDCO's debt-to-equity ratio is very low at 0.27 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Along with this, the company maintains a quick ratio of 3.32, which clearly demonstrates the ability to cover short-term cash needs.
  • Net operating cash flow has significantly increased by 290.36% to $57.17 million when compared to the same quarter last year. In addition, MEDICINES CO has also vastly surpassed the industry average cash flow growth rate of -48.18%.
  • The gross profit margin for MEDICINES CO is rather high; currently it is at 66.35%. Regardless of MDCO's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, MDCO's net profit margin of 4.47% is significantly lower than the industry average.
  • Compared to where it was 12 months ago, the stock is up, but it has so far lagged the appreciation in the S&P 500. The stock's price rise over the last year has driven it to a level which is somewhat expensive compared to the rest of its industry. We feel, however, that other strengths this company displays justify these higher price levels.

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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