Vertex Pharmaceuticals (VRTX) Is Today's Strong 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 Vertex Pharmaceuticals ( VRTX) as a strong on high relative volume candidate. In addition to specific proprietary factors, Trade-Ideas identified Vertex Pharmaceuticals as such a stock due to the following factors:

  • VRTX has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $92.1 million.
  • VRTX has traded 268,411 shares today.
  • VRTX is trading at 4.27 times the normal volume for the stock at this time of day.
  • VRTX is trading at a new high 4.00% above yesterday's close.

'Strong on High Relative Volume' stocks are worth watching because major volume moves tend to indicate underlying activity such as M&A events, material stock news, analyst upgrades, insider buying, buying from 'superinvestors,' or that hedge funds and momentum traders are piling into 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. 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 VRTX:

Vertex Pharmaceuticals Incorporated is engaged in discovering, developing, manufacturing, and commercializing small molecule drugs for patients with serious diseases. Currently there are 9 analysts that rate Vertex Pharmaceuticals a buy, no analysts rate it a sell, and 5 rate it a hold.

The average volume for Vertex Pharmaceuticals has been 2.1 million shares per day over the past 30 days. Vertex has a market cap of $22.1 billion and is part of the health care sector and drugs industry. The stock has a beta of -0.56 and a short float of 3% with 7.34 days to cover. Shares are up 23.2% year-to-date as of the close of trading on Thursday.

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 Vertex Pharmaceuticals as a hold. The company's strengths can be seen in multiple areas, such as its solid stock price performance and largely solid financial position with reasonable debt levels by most measures. However, as a counter to these strengths, we also find weaknesses including feeble growth in the company's earnings per share, unimpressive growth in net income and disappointing return on equity.

Highlights from the ratings report include:
  • Compared to where it was a year ago today, the stock is now trading at a higher level, regardless of the company's weak earnings results. Despite the fact that it has already risen in the past year, there is currently no conclusive evidence that warrants the purchase or sale of this stock.
  • Despite currently having a low debt-to-equity ratio of 0.46, it is higher than that of the industry average, inferring that management of debt levels may need to be evaluated further. Even though the debt-to-equity ratio shows mixed results, the company's quick ratio of 3.58 is very high and demonstrates very strong liquidity.
  • VRTX, 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 55.5%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • VERTEX PHARMACEUTICALS INC has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from 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, VERTEX PHARMACEUTICALS INC reported poor results of -$2.04 versus -$0.50 in the prior year. For the next year, the market is expecting a contraction of 41.7% in earnings (-$2.89 versus -$2.04).
  • 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 178.8% when compared to the same quarter one year ago, falling from -$57.17 million to -$159.38 million.

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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