Perilous Reversal Stock: Tetraphase Pharmaceuticals (TTPH)

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

  • TTPH has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $27.5 million.
  • TTPH has traded 76,210 shares today.
  • TTPH is down 3.1% today.
  • TTPH was up 14.5% yesterday.

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More details on TTPH:

Tetraphase Pharmaceuticals, Inc., a clinical stage biopharmaceutical company, develops various antibiotics for the treatment of serious and life-threatening multi-drug resistant infections. Currently there are 7 analysts that rate Tetraphase Pharmaceuticals a buy, no analysts rate it a sell, and none rate it a hold.

The average volume for Tetraphase Pharmaceuticals has been 624,700 shares per day over the past 30 days. Tetraphase has a market cap of $920.3 million and is part of the health care sector and drugs industry. Shares are up 145.5% year-to-date as of the close of trading on Wednesday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Tetraphase Pharmaceuticals as a sell. The company's weaknesses can be seen in multiple areas, such as its feeble growth in its earnings per share, deteriorating net income and weak operating cash flow.

Highlights from the ratings report include:
  • TETRAPHASE PHARMACEUTICALS's earnings per share declined by 12.2% in the most recent quarter compared to the same quarter a year ago. For the next year, the market is expecting a contraction of 66.7% in earnings (-$2.30 versus -$1.38).
  • 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 Pharmaceuticals industry. The net income has significantly decreased by 40.4% when compared to the same quarter one year ago, falling from -$10.12 million to -$14.21 million.
  • Net operating cash flow has significantly decreased to -$17.74 million or 120.25% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
  • Compared to other companies in the Pharmaceuticals industry and the overall market, TETRAPHASE PHARMACEUTICALS's return on equity significantly trails that of both the industry average and the S&P 500.
  • Compared to its closing price of one year ago, TTPH's share price has jumped by 166.55%, exceeding the performance of the broader market during that same time frame. Regarding the future course of this stock, we feel that the risks involved in investing in TTPH do not compensate for any future upside potential, despite the fact that it has seen nice gains over the past 12 months.

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