Trade-Ideas: Salix Pharmaceuticals (SLXP) Is Today's

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 Salix Pharmaceuticals ( SLXP) as a "dead cat bounce" (down big yesterday but up big today) candidate. In addition to specific proprietary factors, Trade-Ideas identified Salix Pharmaceuticals as such a stock due to the following factors:

  • SLXP has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $382.6 million.
  • SLXP has traded 336,138 shares today.
  • SLXP is up 3.4% today.
  • SLXP was down 34% yesterday.

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More details on SLXP:

Salix Pharmaceuticals, Ltd. acquires, develops, and commercializes prescription drugs and medical devices to treat various gastrointestinal diseases in the United States. SLXP has a PE ratio of 161.1. Currently there are 12 analysts that rate Salix Pharmaceuticals a buy, no analysts rate it a sell, and 2 rate it a hold.

The average volume for Salix Pharmaceuticals has been 1.9 million shares per day over the past 30 days. Salix has a market cap of $8.8 billion and is part of the health care sector and drugs industry. The stock has a beta of 0.80 and a short float of 20.1% with 2.27 days to cover. Shares are up 1.7% year-to-date as of the close of trading on Friday.

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 Salix Pharmaceuticals as a hold. The company's strengths can be seen in multiple areas, such as its robust revenue growth, solid stock price performance and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including deteriorating net income and disappointing return on equity.

Highlights from the ratings report include:
  • The revenue growth greatly exceeded the industry average of 8.8%. Since the same quarter one year prior, revenues rose by 48.9%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • Compared to its closing price of one year ago, SLXP's share price has jumped by 89.69%, exceeding the performance of the broader market during that same time frame. Although SLXP had significant growth over the past year, our hold rating indicates that we do not recommend additional investment in this stock at the current time.
  • SALIX PHARMACEUTICALS LTD 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. 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, SALIX PHARMACEUTICALS LTD increased its bottom line by earning $2.14 versus $1.01 in the prior year. This year, the market expects an improvement in earnings ($6.16 versus $2.14).
  • 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 Pharmaceuticals industry. The net income has significantly decreased by 287.2% when compared to the same quarter one year ago, falling from $47.33 million to -$88.60 million.
  • Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Pharmaceuticals industry and the overall market, SALIX PHARMACEUTICALS LTD's return on equity significantly trails that of both the industry average and the S&P 500.

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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