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

  • ITMN has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $148.9 million.
  • ITMN has traded 899,845 shares today.
  • ITMN is down 3.1% today.
  • ITMN was up 14.4% yesterday.

EXCLUSIVE OFFER: Get the inside scoop on opportunities in ITMN with the Ticky from Trade-Ideas. See the FREE profile for ITMN NOW at Trade-Ideas

More details on ITMN:

InterMune, Inc., a biotechnology company, focuses on the research, development, and commercialization of therapies for pulmonology and orphan fibrotic diseases in North America and Europe. Currently there are 7 analysts that rate InterMune a buy, 1 analyst rates it a sell, and 1 rates it a hold.

The average volume for InterMune has been 2.0 million shares per day over the past 30 days. InterMune has a market cap of $4.9 billion and is part of the health care sector and drugs industry. The stock has a beta of 3.61 and a short float of 15.8% with 3.24 days to cover. Shares are up 253.4% year-to-date as of the close of trading on Wednesday.

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 InterMune as a sell. Among the areas we feel are negative, one of the most important has been generally deteriorating net income.

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 13.2% when compared to the same quarter one year ago, dropping from -$62.87 million to -$71.19 million.
  • The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. Compared to other companies in the Biotechnology industry and the overall market, INTERMUNE INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • The gross profit margin for INTERMUNE INC is currently very high, coming in at 83.86%. Regardless of ITMN's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, ITMN's net profit margin of -199.20% significantly underperformed when compared to the industry average.
  • ITMN's debt-to-equity ratio of 0.64 is somewhat low overall, but it is high when compared to the industry average, implying that the management of the debt levels should be evaluated further.
  • Investors have driven up the company's shares by 193.44% over the past year, a rise that has exceeded that of the S&P 500 Index. Regarding the future course of this stock, we feel that the risks involved in investing in ITMN do not compensate for any future upside potential, despite the fact that it has seen nice gains over the past 12 months.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

null

More from Markets

Jim Cramer: Schlumberger Predicted the Rise in Oil Prices

Jim Cramer: Schlumberger Predicted the Rise in Oil Prices

Jim Cramer on Zillow's New Business: Buying and Selling Homes

Jim Cramer on Zillow's New Business: Buying and Selling Homes

Jim Cramer on the Markets: It's Natural to Have Some Profit Taking

Jim Cramer on the Markets: It's Natural to Have Some Profit Taking

Video: As Trade Worries Subside, Expect a 'Relief Rally' in Stocks

Video: As Trade Worries Subside, Expect a 'Relief Rally' in Stocks

Stocks Trade Mixed Amid Progress on U.S.-China Trade; Dow Turns Lower

Stocks Trade Mixed Amid Progress on U.S.-China Trade; Dow Turns Lower