Exelixis (EXEL) Is Today's Perilous Reversal 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 Exelixis ( EXEL) as a "perilous reversal" (up big yesterday but down big today) candidate. In addition to specific proprietary factors, Trade-Ideas identified Exelixis as such a stock due to the following factors:

  • EXEL has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $26.5 million.
  • EXEL has traded 1.8 million shares today.
  • EXEL is down 3.2% today.
  • EXEL was up 23% yesterday.

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More details on EXEL:

Exelixis, Inc., a biotechnology company, develops small molecule therapies for the treatment of cancer in the United States. Currently there are 5 analysts that rate Exelixis a buy, no analysts rate it a sell, and 3 rate it a hold.

The average volume for Exelixis has been 2.9 million shares per day over the past 30 days. Exelixis has a market cap of $647.4 million and is part of the health care sector and drugs industry. The stock has a beta of 2.16 and a short float of 51% with 7.28 days to cover. Shares are down 33.3% 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 Exelixis as a sell. The company's weaknesses can be seen in multiple areas, such as its feeble growth in its earnings per share, deteriorating net income, disappointing return on equity, weak operating cash flow and generally high debt management risk.

Highlights from the ratings report include:
  • EXELIXIS 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, EXELIXIS INC reported poor results of -$1.32 versus -$0.91 in the prior year. For the next year, the market is expecting a contraction of 18.2% in earnings (-$1.56 versus -$1.32).
  • 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 66.8% when compared to the same quarter one year ago, falling from -$44.73 million to -$74.62 million.
  • Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Biotechnology industry and the overall market, EXELIXIS INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • Net operating cash flow has decreased to -$72.09 million or 32.47% when compared to the same quarter last year. In addition, when comparing the cash generation rate to the industry average, the firm's growth is significantly lower.
  • Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 32.58%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 62.50% compared to the year-earlier quarter. Naturally, the overall market trend is bound to be a significant factor. However, in one sense, the stock's sharp decline last year is a positive for future investors, making it cheaper (in proportion to its earnings over the past year) than most other stocks in its industry. But due to other concerns, we feel the stock is still not a good buy right now.

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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