NPS Pharmaceuticals (NPSP) Stock: Weak On High Volume Today

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 NPS Pharmaceuticals ( NPSP) as a weak on high relative volume candidate. In addition to specific proprietary factors, Trade-Ideas identified NPS Pharmaceuticals as such a stock due to the following factors:

  • NPSP has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $37.3 million.
  • NPSP has traded 224,021 shares today.
  • NPSP is trading at 4.33 times the normal volume for the stock at this time of day.
  • NPSP is trading at a new low 3.15% 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 NPSP:

NPS Pharmaceuticals, Inc., a biopharmaceutical company, engages in the development of therapeutic products in the United States. Its lead product is Gattex for the treatment of adult patients with short bowel syndrome (SBS) who are dependent on parenteral support. NPSP has a PE ratio of 754.5. Currently there are 9 analysts that rate NPS Pharmaceuticals a buy, no analysts rate it a sell, and 1 rates it a hold.

The average volume for NPS Pharmaceuticals has been 1.7 million shares per day over the past 30 days. NPS has a market cap of $3.2 billion and is part of the health care sector and drugs industry. The stock has a beta of 0.08 and a short float of 12.5% with 5.69 days to cover. Shares are down 0.6% year-to-date as of the close of trading on Friday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates NPS Pharmaceuticals as a hold. The company's strengths can be seen in multiple areas, such as its robust revenue growth, impressive record of earnings per share growth and compelling growth in net income. However, as a counter to these strengths, we find that the stock has experienced relatively poor performance when compared with the S&P 500 during the past year.

Highlights from the ratings report include:
  • NPSP's very impressive revenue growth exceeded the industry average of 43.4%. Since the same quarter one year prior, revenues leaped by 53.8%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • NPS PHARMACEUTICALS INC reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past year. We feel that this trend should continue. This trend suggests that the performance of the business is improving. During the past fiscal year, NPS PHARMACEUTICALS INC continued to lose money by earning -$0.16 versus -$0.22 in the prior year. This year, the market expects an improvement in earnings ($0.05 versus -$0.16).
  • Net operating cash flow has increased to -$6.08 million or 31.25% when compared to the same quarter last year. Despite an increase in cash flow of 31.25%, NPS PHARMACEUTICALS INC is still growing at a significantly lower rate than the industry average of 101.26%.
  • 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, NPS PHARMACEUTICALS INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • Compared to where it was 12 months ago, the stock is up, but it has so far lagged the appreciation in the S&P 500. We feel that the combination of its price rise over the last year and its current price-to-earnings ratio relative to its industry tend to reduce its upside potential.

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