Seattle Genetics (SGEN) Marked As A Barbarian At The Gate

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 Seattle Genetics ( SGEN) 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 Seattle Genetics as such a stock due to the following factors:

  • SGEN has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $31.2 million.
  • SGEN has traded 1.6 million shares today.
  • SGEN traded in a range 226.2% of the normal price range with a price range of $2.83.
  • SGEN traded above its daily resistance level (quality: 20 days, meaning that the stock is crossing a resistance level set by the last 20 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 SGEN:

Seattle Genetics, Inc., a biotechnology company, develops and commercializes antibody-based therapies for the treatment of cancer. Currently there are 4 analysts that rate Seattle Genetics a buy, 2 analysts rate it a sell, and 2 rate it a hold.

The average volume for Seattle Genetics has been 1.0 million shares per day over the past 30 days. Seattle has a market cap of $4.4 billion and is part of the health care sector and drugs industry. The stock has a beta of 1.36 and a short float of 23.9% with 20.70 days to cover. Shares are down 11.8% year-to-date as of the close of trading on Thursday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Seattle Genetics as a sell. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income, disappointing return on equity, generally disappointing historical performance in the stock itself 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 underperformed when compared to that of the S&P 500 and greatly underperformed compared to the Biotechnology industry average. The net income has decreased by 0.2% when compared to the same quarter one year ago, dropping from -$16.26 million to -$16.30 million.
  • The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. Compared to other companies in the Biotechnology industry and the overall market, SEATTLE GENETICS INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • SGEN has underperformed the S&P 500 Index, declining 11.80% from its price level of one year ago. The fact that the stock is now selling for less than others in its industry in relation to its current earnings is not reason enough to justify a buy rating at this time.
  • SEATTLE GENETICS INC has improved earnings per share by 7.1% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. We feel it is likely to report a decline in earnings in the coming year. During the past fiscal year, SEATTLE GENETICS INC reported poor results of -$0.52 versus -$0.47 in the prior year. For the next year, the market is expecting a contraction of 70.2% in earnings (-$0.89 versus -$0.52).
  • The gross profit margin for SEATTLE GENETICS INC is currently very high, coming in at 95.18%. It has increased significantly from the same period last year. Regardless of the strong results of the gross profit margin, the net profit margin of -23.87% is in-line with the industry average.

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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