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 NPS Pharmaceuticals ( NPSP) as a "barbarian at the gate" (strong stocks crossing above resistance with today's range greater than 200%) candidate. In addition to specific proprietary factors, Trade-Ideas identified NPS Pharmaceuticals as such a stock due to the following factors:

  • NPSP has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $29.8 million.
  • NPSP has traded 324,834 shares today.
  • NPSP traded in a range 265.5% of the normal price range with a price range of $3.88.
  • NPSP traded above its daily resistance level (quality: 8 days, meaning that the stock is crossing a resistance level set by the last 8 calendar days. The resistance price is defined by the Price - $0.01 at the time of the signal).

Stocks matching the 'Barbarian at the Gate' 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 positive price action. In this case, the stock crossed an important inflection point; namely, 'resistance' while at the same time the range of the stock's movement in price is more than twice its normal size. This large range foreshadows a possible continuation as the stock moves higher.

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More details on NPSP:

NPS Pharmaceuticals, Inc., a biopharmaceutical company, engages in the development of therapeutic products in the United States. Its lead product is Gattex for the treatment of adult patients with short bowel syndrome (SBS) who are dependent on parenteral support. NPSP has a PE ratio of 1564.0. Currently there are 7 analysts that rate NPS Pharmaceuticals a buy, no analysts rate it a sell, and 1 rates it a hold.

The average volume for NPS Pharmaceuticals has been 1.7 million shares per day over the past 30 days. NPS has a market cap of $3.3 billion and is part of the health care sector and drugs industry. The stock has a beta of 0.09 and a short float of 10.8% with 10.84 days to cover. Shares are down 0.9% 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 NPS Pharmaceuticals as a hold. The company's strengths can be seen in multiple areas, such as its robust revenue growth, expanding profit margins and good cash flow from operations. However, as a counter to these strengths, we find that the growth in the company's net income has been quite unimpressive.

Highlights from the ratings report include:
  • NPSP's revenue growth has slightly outpaced the industry average of 41.1%. Since the same quarter one year prior, revenues rose by 45.9%. 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.
  • The gross profit margin for NPS PHARMACEUTICALS INC is currently very high, coming in at 95.92%. It has increased significantly from the same period last year. Regardless of the strong results of the gross profit margin, the net profit margin of -3.75% is in-line with the industry average.
  • Net operating cash flow has significantly increased by 106.24% to $0.43 million when compared to the same quarter last year. Despite an increase in cash flow, NPS PHARMACEUTICALS INC's cash flow growth rate is still lower than the industry average growth rate of 117.71%.
  • Compared to its closing price of one year ago, NPSP's share price has jumped by 42.53%, exceeding the performance of the broader market during that same time frame. Looking ahead, however, we cannot assume that the stock's past performance is going to drive future results. Quite to the contrary, its sharp appreciation over the last year is one of the factors that should prompt investors to seek better opportunities elsewhere.
  • 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 significantly decreased by 97.4% when compared to the same quarter one year ago, falling from -$1.09 million to -$2.15 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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