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

  • NLNK has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $21.0 million.
  • NLNK has traded 50,038 shares today.
  • NLNK is down 3.8% today.
  • NLNK was up 9% yesterday.

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More details on NLNK:

NewLink Genetics Corporation, a biopharmaceutical company, focuses on discovering, developing, and commercializing immunotherapeutic products to enhance treatment options for patients with cancer. Currently there are 3 analysts that rate NewLink Genetics a buy, no analysts rate it a sell, and 1 rates it a hold.

The average volume for NewLink Genetics has been 360,400 shares per day over the past 30 days. NewLink has a market cap of $719.8 million and is part of the health care sector and drugs industry. The stock has a beta of -0.64 and a short float of 25.1% with 6.27 days to cover. Shares are up 27.8% 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 NewLink Genetics as a sell. The company's weaknesses can be seen in multiple areas, such as its feeble growth in its earnings per share and deteriorating net income.

Highlights from the ratings report include:
  • NEWLINK GENETICS CORP's earnings per share declined by 17.9% in the most recent quarter compared to 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, NEWLINK GENETICS CORP reported poor results of -$1.24 versus -$1.12 in the prior year. For the next year, the market is expecting a contraction of 16.9% in earnings (-$1.45 versus -$1.24).
  • 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 29.5% when compared to the same quarter one year ago, falling from -$7.08 million to -$9.16 million.
  • The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Biotechnology industry and the overall market, NEWLINK GENETICS CORP's return on equity significantly trails that of both the industry average and the S&P 500.
  • The revenue fell significantly faster than the industry average of 43.4%. Since the same quarter one year prior, revenues slightly dropped by 8.6%. The declining revenue appears to have seeped down to the company's bottom line, decreasing earnings per share.
  • NLNK's debt-to-equity ratio is very low at 0.01 and is currently below that of the industry average, implying that there has been very successful management of debt levels.

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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