Sangamo BioSciences (SGMO) Is 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 Sangamo BioSciences ( SGMO) as a "perilous reversal" (up big yesterday but down big today) candidate. In addition to specific proprietary factors, Trade-Ideas identified Sangamo BioSciences as such a stock due to the following factors:

  • SGMO has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $16.9 million.
  • SGMO has traded 185,059 shares today.
  • SGMO is down 3.2% today.
  • SGMO was up 17.5% yesterday.

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More details on SGMO:

Sangamo BioSciences, Inc., a clinical stage biopharmaceutical company, focuses on the research, development, and commercialization of zinc finger DNA-binding proteins (ZFPs) for gene regulation and gene modification in the United States. Currently there are 4 analysts that rate Sangamo BioSciences a buy, no analysts rate it a sell, and none rate it a hold.

The average volume for Sangamo BioSciences has been 786,400 shares per day over the past 30 days. Sangamo BioSciences has a market cap of $898.1 million and is part of the health care sector and drugs industry. The stock has a beta of 2.73 and a short float of 16.4% with 9.41 days to cover. Shares are up 1.3% 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 Sangamo BioSciences as a hold. The company's strengths can be seen in multiple areas, such as its robust revenue growth, largely solid financial position with reasonable debt levels by most measures and solid stock price performance. However, as a counter to these strengths, we also find weaknesses including deteriorating net income and weak operating cash flow.

Highlights from the ratings report include:
  • SGMO's very impressive revenue growth greatly exceeded the industry average of 41.1%. Since the same quarter one year prior, revenues leaped by 117.6%. This growth in revenue does not appear to have trickled down to the company's bottom line, displaying stagnant earnings per share.
  • SGMO has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign. Along with this, the company maintains a quick ratio of 8.80, which clearly demonstrates the ability to cover short-term cash needs.
  • 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.
  • Net operating cash flow has decreased to -$5.77 million or 27.78% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
  • 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 decreased by 22.8% when compared to the same quarter one year ago, dropping from -$6.15 million to -$7.55 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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