Biogen Idec (BIIB) Showing Signs Of Perilous Reversal Today

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

  • BIIB has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $546.8 million.
  • BIIB has traded 550,231 shares today.
  • BIIB is down 3% today.
  • BIIB was up 6.3% yesterday.

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More details on BIIB:

Biogen Idec Inc. discovers, develops, manufactures, and markets therapies for the treatment of multiple sclerosis (MS), neurodegenerative diseases, hemophilia, and autoimmune disorders in the United States and internationally. BIIB has a PE ratio of 30.8. Currently there are 12 analysts that rate Biogen Idec a buy, no analysts rate it a sell, and 5 rate it a hold.

The average volume for Biogen Idec has been 1.6 million shares per day over the past 30 days. Biogen Idec has a market cap of $76.8 billion and is part of the health care sector and drugs industry. The stock has a beta of 0.91 and a short float of 1.2% with 1.56 days to cover. Shares are up 19.1% year-to-date as of the close of trading on Wednesday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Biogen Idec as a buy. The company's strengths can be seen in multiple areas, such as its solid stock price performance, impressive record of earnings per share growth, compelling growth in net income, robust revenue growth and largely solid financial position with reasonable debt levels by most measures. Although no company is perfect, currently we do not see any significant weaknesses which are likely to detract from the generally positive outlook.

Highlights from the ratings report include:
  • Looking at where the stock is today compared to one year ago, we find that it is not only higher, but it has also clearly outperformed the rise in the S&P 500 over the same period. Although other factors naturally played a role, the company's strong earnings growth was key. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
  • BIOGEN IDEC INC reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, BIOGEN IDEC INC increased its bottom line by earning $7.82 versus $5.76 in the prior year. This year, the market expects an improvement in earnings ($13.52 versus $7.82).
  • The company, on the basis of net income growth from the same quarter one year ago, has significantly outperformed against the S&P 500 and exceeded that of the Biotechnology industry average. The net income increased by 75.7% when compared to the same quarter one year prior, rising from $487.62 million to $856.86 million.
  • Despite its growing revenue, the company underperformed as compared with the industry average of 41.1%. Since the same quarter one year prior, revenues rose by 37.4%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • BIIB's debt-to-equity ratio is very low at 0.06 and is currently below that of the industry average, implying that there has been very successful management of debt levels. To add to this, BIIB has a quick ratio of 1.66, which demonstrates the ability of the company to cover short-term liquidity needs.

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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