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

  • IRWD has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $23.5 million.
  • IRWD has traded 128,148 shares today.
  • IRWD is up 3.3% today.
  • IRWD was down 9.4% yesterday.

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More details on IRWD:

Ironwood Pharmaceuticals, Inc., an entrepreneurial pharmaceutical company, discovers, develops, and commercializes human therapeutic products. Currently there are 5 analysts that rate Ironwood Pharmaceuticals a buy, 1 analyst rates it a sell, and 4 rate it a hold.

The average volume for Ironwood Pharmaceuticals has been 1.3 million shares per day over the past 30 days. Ironwood has a market cap of $1.8 billion and is part of the health care sector and drugs industry. The stock has a beta of 2.10 and a short float of 17.3% with 7.79 days to cover. Shares are up 27.9% year-to-date as of the close of trading on Tuesday.

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 Ironwood Pharmaceuticals as a sell. The company's weaknesses can be seen in multiple areas, such as its disappointing return on equity and generally high debt management risk.

Highlights from the ratings report include:
  • 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, IRONWOOD PHARMACEUTICALS INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • The debt-to-equity ratio of 1.26 is relatively high when compared with the industry average, suggesting a need for better debt level management. Despite the company's weak debt-to-equity ratio, the company has managed to keep a very strong quick ratio of 7.36, which shows the ability to cover short-term cash needs.
  • The company, on the basis of net income growth from the same quarter one year ago, has significantly underperformed compared to the Biotechnology industry average, but is greater than that of the S&P 500. The net income increased by 7.3% when compared to the same quarter one year prior, going from -$65.15 million to -$60.36 million.
  • The revenue fell significantly faster than the industry average of 36.4%. Since the same quarter one year prior, revenues fell by 29.2%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
  • IRONWOOD PHARMACEUTICALS INC has improved earnings per share by 22.8% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, IRONWOOD PHARMACEUTICALS INC reported poor results of -$2.38 versus -$0.71 in the prior year. This year, the market expects an improvement in earnings (-$1.34 versus -$2.38).

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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