Theravance (THRX) Highlighted As Today's Perilous Reversal 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 Theravance ( THRX) as a "perilous reversal" (up big yesterday but down big today) candidate. In addition to specific proprietary factors, Trade-Ideas identified Theravance as such a stock due to the following factors:

  • THRX has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $15.3 million.
  • THRX has traded 267,650 shares today.
  • THRX is down 3% today.
  • THRX was up 8.8% yesterday.

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More details on THRX:

Theravance, Inc., a royalty management company, is focused on developing respiratory products. The stock currently has a dividend yield of 7.2%. Currently there is 1 analyst that rates Theravance a buy, 1 analyst rates it a sell, and 3 rate it a hold.

The average volume for Theravance has been 948,300 shares per day over the past 30 days. Theravance has a market cap of $1.6 billion and is part of the health care sector and drugs industry. The stock has a beta of 1.14 and a short float of 50.7% with 22.54 days to cover. Shares are down 57.4% year-to-date as of the close of trading on Monday.

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 Theravance as a sell. The company's weaknesses can be seen in multiple areas, such as its feeble growth in its earnings per share and generally disappointing historical performance in the stock itself.

Highlights from the ratings report include:
  • THERAVANCE 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 year. We anticipate that this should continue in the coming year. During the past fiscal year, THERAVANCE INC reported poor results of -$0.68 versus -$0.19 in the prior year. For the next year, the market is expecting a contraction of 114.7% in earnings (-$1.46 versus -$0.68).
  • Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 52.16%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 111.11% compared to the year-earlier 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.
  • Net operating cash flow has increased to -$21.07 million or 48.99% when compared to the same quarter last year. In addition, THERAVANCE INC has also vastly surpassed the industry average cash flow growth rate of -19.65%.
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Pharmaceuticals industry. The net income increased by 54.7% when compared to the same quarter one year prior, rising from -$46.98 million to -$21.27 million.
  • THRX's very impressive revenue growth greatly exceeded the industry average of 8.8%. Since the same quarter one year prior, revenues leaped by 140.7%. 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.

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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