Organovo Holdings (ONVO): Today's Weak On High Volume 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 Organovo Holdings ( ONVO) as a weak on high relative volume candidate. In addition to specific proprietary factors, Trade-Ideas identified Organovo Holdings as such a stock due to the following factors:

  • ONVO has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $6.2 million.
  • ONVO has traded 219,263 shares today.
  • ONVO is trading at 2.62 times the normal volume for the stock at this time of day.
  • ONVO is trading at a new low 3.02% below yesterday's close.

'Weak on High Relative Volume' stocks are worth watching because major volume moves tend to indicate underlying activity such as material stock news, analyst downgrades, insider selling, selling from 'superinvestors,' or that hedge funds and traders are piling out of a stock ahead of a catalyst. Regardless of the impetus behind the price and volume action, when a stock moves with strength and volume it can indicate the start of a new trend on which early investors can capitalize (or avoid losses by trimming weak positions). In the event of a well-timed trading opportunity, combining technical indicators with fundamental trends and a disciplined trading methodology should help you take the first steps towards investment success.

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More details on ONVO:

Organovo Holdings, Inc., a development-stage company, focuses on developing and commercializing functional human tissues that could be employed in drug discovery and development, biological research, and as therapeutic implants for the treatment of damaged or degenerating tissues and organs. Currently there are no analysts that rate Organovo Holdings a buy, no analysts rate it a sell, and 1 rates it a hold.

The average volume for Organovo Holdings has been 1.4 million shares per day over the past 30 days. Organovo has a market cap of $621.6 million and is part of the health care sector and health services industry. The stock has a beta of -0.50 and a short float of 28.5% with 22.37 days to cover. Shares are down 28.1% year-to-date as of the close of trading on Wednesday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Organovo Holdings as a sell. Among the areas we feel are negative, one of the most important has been weak operating cash flow.

Highlights from the ratings report include:
  • Net operating cash flow has significantly decreased to -$5.40 million or 172.86% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
  • 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 32.2% when compared to the same quarter one year prior, rising from -$9.57 million to -$6.48 million.
  • ONVO, with its very weak revenue results, has greatly underperformed against the industry average of 43.4%. Since the same quarter one year prior, revenues plummeted by 67.0%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
  • Compared to other companies in the Biotechnology industry and the overall market, ORGANOVO HOLDINGS INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • ONVO's debt-to-equity ratio is very low at 0.00 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Along with this, the company maintains a quick ratio of 25.44, which clearly demonstrates the ability to cover short-term cash needs.

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