XOMA (XOMA) 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 XOMA ( XOMA) as a "dead cat bounce" (down big yesterday but up big today) candidate. In addition to specific proprietary factors, Trade-Ideas identified XOMA as such a stock due to the following factors:

  • XOMA has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $33.0 million.
  • XOMA has traded 141,967 shares today.
  • XOMA is up 3.4% today.
  • XOMA was down 27.8% yesterday.

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More details on XOMA:

XOMA Corporation discovers and develops antibody-based therapeutics in the United States, Europe, and the Asia Pacific. The company offers ACEON, an angiotensin converting enzyme inhibitor. Currently there are 8 analysts that rate XOMA a buy, no analysts rate it a sell, and none rate it a hold.

The average volume for XOMA has been 2.2 million shares per day over the past 30 days. XOMA has a market cap of $910.6 million and is part of the health care sector and drugs industry. The stock has a beta of 2.78 and a short float of 9% with 1.20 days to cover. Shares are up 32.4% year-to-date as of the close of trading on Tuesday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates XOMA as a sell. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income and feeble growth in its earnings per share.

Highlights from the ratings report include:
  • 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 2310.4% when compared to the same quarter one year ago, falling from $2.37 million to -$52.30 million.
  • XOMA CORP 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. The company has reported a trend of declining earnings per share over the past two years. However, the consensus estimate suggests that this trend should reverse in the coming year. During the past fiscal year, XOMA CORP reported poor results of -$1.40 versus -$1.29 in the prior year. This year, the market expects an improvement in earnings (-$0.76 versus -$1.40).
  • Compared to its closing price of one year ago, XOMA's share price has jumped by 231.22%, exceeding the performance of the broader market during that same time frame. Regarding the future course of this stock, we feel that the risks involved in investing in XOMA do not compensate for any future upside potential, despite the fact that it has seen nice gains over the past 12 months.
  • XOMA's very impressive revenue growth greatly exceeded the industry average of 15.2%. Since the same quarter one year prior, revenues leaped by 69.6%. 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.

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