Perilous Reversal Watch: Intercept Pharmaceuticals (ICPT)

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

  • ICPT has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $308.7 million.
  • ICPT has traded 109,288 shares today.
  • ICPT is down 3.3% today.
  • ICPT was up 11.2% yesterday.

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More details on ICPT:

Intercept Pharmaceuticals, Inc., a development stage biopharmaceutical company, focuses on the development and commercialization of novel therapeutics to treat chronic liver and intestinal diseases utilizing its proprietary bile acid chemistry. ICPT has a PE ratio of 51.9. Currently there are 5 analysts that rate Intercept Pharmaceuticals a buy, no analysts rate it a sell, and 1 rates it a hold.

The average volume for Intercept Pharmaceuticals has been 550,700 shares per day over the past 30 days. Intercept has a market cap of $5.8 billion and is part of the health care sector and drugs industry. The stock has a beta of -3.22 and a short float of 9.9% with 0.77 days to cover. Shares are up 350.5% year-to-date as of the close of trading on Wednesday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Intercept Pharmaceuticals as a hold. The company's strengths can be seen in multiple areas, such as its solid stock price performance, increase in net income and revenue growth. However, as a counter to these strengths, we also find weaknesses including disappointing return on equity, weak operating cash flow and feeble growth in the company's earnings per share.

Highlights from the ratings report include:
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Biotechnology industry. The net income increased by 348.3% when compared to the same quarter one year prior, rising from -$13.48 million to $33.47 million.
  • The revenue growth significantly trails the industry average of 42.5%. Since the same quarter one year prior, revenues slightly increased by 9.8%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • 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, INTERCEPT PHARMA INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • Net operating cash flow has significantly decreased to -$19.41 million or 252.39% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.

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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