Trade-Ideas: AstraZeneca (AZN) Is Today's

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 AstraZeneca ( AZN) as a "barbarian at the gate" (strong stocks crossing above resistance with today's range greater than 200%) candidate. In addition to specific proprietary factors, Trade-Ideas identified AstraZeneca as such a stock due to the following factors:

  • AZN has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $119.6 million.
  • AZN has traded 8.3 million shares today.
  • AZN traded in a range 251.3% of the normal price range with a price range of $2.11.
  • AZN traded above its daily resistance level (quality: 534 days, meaning that the stock is crossing a resistance level set by the last 534 calendar days. The resistance price is defined by the Price - $0.01 at the time of the signal).

Stocks matching the 'Barbarian at the Gate' criteria are worthwhile stocks to watch for a variety of factors including historical back testing and volatility. Trade-Ideas targets these opportunities because the stock is exhibiting an unusual behavior while displaying positive price action. In this case, the stock crossed an important inflection point; namely, 'resistance' while at the same time the range of the stock's movement in price is more than twice its normal size. This large range foreshadows a possible continuation as the stock moves higher.

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More details on AZN:

AstraZeneca PLC is engaged in the discovery, development, and commercialization of medicines for cardiovascular and metabolic disease; oncology; respiratory, inflammation, and autoimmunity; and infection, neuroscience, and gastrointestinal disease areas worldwide. The stock currently has a dividend yield of 4.2%. AZN has a PE ratio of 13.3. Currently there are 2 analysts that rate AstraZeneca a buy, 2 analysts rate it a sell, and 3 rate it a hold.

The average volume for AstraZeneca has been 2.3 million shares per day over the past 30 days. AstraZeneca has a market cap of $79.8 billion and is part of the health care sector and drugs industry. Shares are up 6.9% year-to-date as of the close of trading on Thursday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates AstraZeneca as a buy. The company's strengths can be seen in multiple areas, such as its largely solid financial position with reasonable debt levels by most measures and solid stock price performance. We feel these strengths outweigh the fact that the company has had sub par growth in net income.

Highlights from the ratings report include:
  • The current debt-to-equity ratio, 0.45, is low and is below the industry average, implying that there has been successful management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.05, which illustrates the ability to avoid short-term cash problems.
  • ASTRAZENECA PLC 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 suffered a declining pattern of earnings per share over the past two years. However, we anticipate this trend to reverse over the coming year. During the past fiscal year, ASTRAZENECA PLC reported lower earnings of $2.04 versus $4.94 in the prior year. This year, the market expects an improvement in earnings ($4.25 versus $2.04).
  • AZN, with its decline in revenue, slightly underperformed the industry average of 0.7%. Since the same quarter one year prior, revenues slightly dropped by 2.8%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • Looking at where the stock is today compared to one year ago, we find that it is not only higher, but it has also clearly outperformed the rise in the S&P 500 over the same period, despite the company's weak earnings results. 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.
  • Net operating cash flow has decreased to $2,478.00 million or 12.99% when compared to the same quarter last year. Despite a decrease in cash flow of 12.99%, ASTRAZENECA PLC is in line with the industry average cash flow growth rate of -16.34%.

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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