Trade-Ideas: Isis Pharmaceuticals (ISIS) 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 Isis Pharmaceuticals ( ISIS) as a "water-logged and getting wetter" (weak stocks crossing below support with today's range greater than 200%) candidate. In addition to specific proprietary factors, Trade-Ideas identified Isis Pharmaceuticals as such a stock due to the following factors:

  • ISIS has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $144.9 million.
  • ISIS has traded 1.8 million shares today.
  • ISIS traded in a range 240.8% of the normal price range with a price range of $6.50.
  • ISIS traded below its daily resistance level (quality: 5 days, meaning that the stock is crossing a resistance level set by the last 5 calendar days. The resistance price is defined by the Price - $0.01 at the time of the signal).

Stocks matching the 'Water-Logged and Getting Wetter' criteria are worthwhile stocks to watch for a variety of factors including historical back testing and volatility. Trade-Ideas targets these opportunities because the stock is exhibiting an unusual behavior while displaying negative price action. In this case, the stock crossed an important inflection point; namely, "support" while at the same time the range of the stock's movement in price is twice its normal size. This large range foreshadows a possible continuation as the stock moves lower.

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More details on ISIS:

Isis Pharmaceuticals, Inc. is engaged in the discovery and development of antisense drugs using novel drug discovery platform. Currently there are 4 analysts that rate Isis Pharmaceuticals a buy, 1 analyst rates it a sell, and 2 rate it a hold.

The average volume for Isis Pharmaceuticals has been 2.2 million shares per day over the past 30 days. Isis has a market cap of $7.2 billion and is part of the health care sector and drugs industry. The stock has a beta of 1.63 and a short float of 14.7% with 5.81 days to cover. Shares are up 55.3% 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 Isis Pharmaceuticals as a sell. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income, disappointing return on equity, weak operating cash flow and feeble growth in its earnings per share.

Highlights from the ratings report include:
  • The company, on the basis of change in net income from the same quarter one year ago, has underperformed when compared to that of the S&P 500 and greatly underperformed compared to the Biotechnology industry average. The net income has decreased by 8.6% when compared to the same quarter one year ago, dropping from -$24.57 million to -$26.68 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 Biotechnology industry and the overall market, ISIS PHARMACEUTICALS INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • Net operating cash flow has significantly decreased to $1.94 million or 97.04% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
  • ISIS PHARMACEUTICALS INC's earnings per share declined by 9.5% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. We feel it is likely to report a decline in earnings in the coming year. During the past fiscal year, ISIS PHARMACEUTICALS INC continued to lose money by earning -$0.53 versus -$0.65 in the prior year. For the next year, the market is expecting a contraction of 24.5% in earnings (-$0.66 versus -$0.53).
  • Despite currently having a low debt-to-equity ratio of 0.47, 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 6.21 is very high and demonstrates very strong liquidity.

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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