Stock To Watch: Dyax Corporation (DYAX) In Perilous Reversal

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

  • DYAX has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $24.2 million.
  • DYAX has traded 547,266 shares today.
  • DYAX is down 3.1% today.
  • DYAX was up 5.2% yesterday.

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More details on DYAX:

Dyax Corp., a biopharmaceutical company, identifies, develops, and commercializes treatments for hereditary angioedema (HAE) and plasma kallikrein-mediated (PKM) angioedemas. The company offers KALBITOR for the treatment of acute attacks of HAE. Currently there are 6 analysts that rate Dyax Corporation a buy, no analysts rate it a sell, and 1 rates it a hold.

The average volume for Dyax Corporation has been 1.4 million shares per day over the past 30 days. Dyax has a market cap of $1.0 billion and is part of the health care sector and drugs industry. The stock has a beta of 1.09 and a short float of 5.5% with 0.95 days to cover. Shares are up 15.6% year-to-date as of the close of trading on Thursday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Dyax Corporation as a sell. The company's weaknesses can be seen in multiple areas, such as its poor profit margins and generally high debt management risk.

Highlights from the ratings report include:
  • The gross profit margin for DYAX CORP is currently extremely low, coming in at 5.78%. Despite the low profit margin, it has increased significantly from the same period last year. Despite the mixed results of the gross profit margin, DYAX's net profit margin of -11.64% significantly underperformed when compared to the industry average.
  • The debt-to-equity ratio is very high at 3.13 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. Despite the company's weak debt-to-equity ratio, the company has managed to keep a very strong quick ratio of 6.73, which shows the ability to cover short-term cash needs.
  • Compared to other companies in the Biotechnology industry and the overall market, DYAX CORP's return on equity significantly trails that of both the industry average and the S&P 500.
  • Net operating cash flow has increased to -$1.63 million or 12.23% when compared to the same quarter last year. Despite an increase in cash flow of 12.23%, DYAX CORP is still growing at a significantly lower rate than the industry average of 63.23%.
  • This stock has increased by 126.63% over the past year, outperforming the rise in the S&P 500 Index during the same period. Regarding the future course of this stock, we feel that the risks involved in investing in DYAX do not compensate for any future upside potential, despite the fact that it has seen nice gains over the past 12 months.

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