Water-Logged And Getting Wetter: Regeneron Pharmaceuticals (REGN)

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 Regeneron Pharmaceuticals ( REGN) 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 Regeneron Pharmaceuticals as such a stock due to the following factors:

  • REGN has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $242.9 million.
  • REGN has traded 304,035 shares today.
  • REGN traded in a range 207% of the normal price range with a price range of $18.72.
  • REGN traded below its daily resistance level (quality: 26 days, meaning that the stock is crossing a resistance level set by the last 26 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 REGN:

Regeneron Pharmaceuticals, Inc., a biopharmaceutical company, discovers, invents, develops, manufactures, and commercializes medicines for the treatment of serious medical conditions in the United States and internationally. REGN has a PE ratio of 142.9. Currently there are 10 analysts that rate Regeneron Pharmaceuticals a buy, no analysts rate it a sell, and 5 rate it a hold.

The average volume for Regeneron Pharmaceuticals has been 821,200 shares per day over the past 30 days. Regeneron has a market cap of $42.2 billion and is part of the health care sector and drugs industry. The stock has a beta of 1.62 and a short float of 5.1% with 6.48 days to cover. Shares are up 54.2% year-to-date as of the close of trading on Thursday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Regeneron Pharmaceuticals as a buy. 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, good cash flow from operations and solid stock price performance. We feel these strengths outweigh the fact that the company has had sub par growth in net income.

Highlights from the ratings report include:
  • REGN's revenue growth trails the industry average of 41.1%. Since the same quarter one year prior, revenues rose by 21.6%. 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.
  • REGN's debt-to-equity ratio is very low at 0.22 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Along with this, the company maintains a quick ratio of 4.80, which clearly demonstrates the ability to cover short-term cash needs.
  • Compared to its closing price of one year ago, REGN's share price has jumped by 57.15%, exceeding the performance of the broader market during that same time frame. We feel that the stock's sharp appreciation over the last year has driven it to a price level which is now somewhat expensive compared to the rest of its industry. The other strengths this company shows, however, justify the higher price levels.
  • Net operating cash flow has significantly increased by 76.90% to $163.56 million when compared to the same quarter last year. Despite an increase in cash flow, REGENERON PHARMACEUTICALS's cash flow growth rate is still lower than the industry average growth rate of 117.71%.
  • REGENERON PHARMACEUTICALS's earnings per share declined by 44.0% in the most recent quarter compared to the same quarter a year ago. The company has suffered a declining pattern of earnings per share over the past year. However, we anticipate this trend reversing over the coming year. During the past fiscal year, REGENERON PHARMACEUTICALS reported lower earnings of $3.80 versus $6.61 in the prior year. This year, the market expects an improvement in earnings ($10.04 versus $3.80).

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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