Endocyte (ECYT) Showing Signs Of Perilous Reversal 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 Endocyte ( ECYT) as a "perilous reversal" (up big yesterday but down big today) candidate. In addition to specific proprietary factors, Trade-Ideas identified Endocyte as such a stock due to the following factors:

  • ECYT has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $19.1 million.
  • ECYT has traded 102,906 shares today.
  • ECYT is down 3.1% today.
  • ECYT was up 13.1% yesterday.

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More details on ECYT:

Endocyte, Inc., a biopharmaceutical company, develops targeted therapies for the treatment of cancer and inflammatory diseases in the United States. The company uses its proprietary technology to create novel small molecule drug conjugates (SMDCs) and companion imaging agents. ECYT has a PE ratio of 22.2. Currently there are 4 analysts that rate Endocyte a buy, no analysts rate it a sell, and 3 rate it a hold.

The average volume for Endocyte has been 1.1 million shares per day over the past 30 days. Endocyte has a market cap of $285.5 million and is part of the health care sector and drugs industry. The stock has a beta of 0.78 and a short float of 19.6% with 2.96 days to cover. Shares are down 24.7% year-to-date as of the close of trading on Tuesday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Endocyte as a hold. The company's strengths can be seen in multiple areas, such as its robust revenue growth, compelling growth in net income and reasonable valuation levels. However, as a counter to these strengths, we find that the stock has had a generally disappointing performance in the past year.

Highlights from the ratings report include:
  • ECYT's very impressive revenue growth greatly exceeded the industry average of 4.6%. Since the same quarter one year prior, revenues leaped by 198.3%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • ENDOCYTE INC reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, ENDOCYTE INC reported poor results of -$0.50 versus -$0.47 in the prior year. This year, the market expects an improvement in earnings (-$0.10 versus -$0.50).
  • 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. In comparison to the other companies in the Pharmaceuticals industry and the overall market, ENDOCYTE INC's return on equity is significantly below that of the industry average and is below that of the S&P 500.
  • ECYT's stock share price has done very poorly compared to where it was a year ago: Despite any rallies, the net result is that it is down by 54.97%, which is also worse that the performance of the S&P 500 Index. Investors have so far failed to pay much attention to the earnings improvements the company has managed to achieve over the last quarter. Naturally, the overall market trend is bound to be a significant factor. However, in one sense, the stock's sharp decline last year is a positive for future investors, making it cheaper (in proportion to its earnings over the past year) than most other stocks in its industry. But due to other concerns, we feel the stock is still not a good buy right now.

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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