Receptos (RCPT) Falls Further As It's Water-Logged And Getting Wetter

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 Receptos ( RCPT) 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 Receptos as such a stock due to the following factors:

  • RCPT has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $89.4 million.
  • RCPT has traded 125,105 shares today.
  • RCPT traded in a range 221.1% of the normal price range with a price range of $14.40.
  • RCPT 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 RCPT:

Receptos, Inc., a clinical-stage biopharmaceutical company, focuses on the discovery, development, and commercialization of various therapeutics for immune disorders. Currently there are 3 analysts that rate Receptos a buy, no analysts rate it a sell, and none rate it a hold.

The average volume for Receptos has been 645,800 shares per day over the past 30 days. Receptos has a market cap of $3.5 billion and is part of the health care sector and drugs industry. Shares are up 360.9% year-to-date as of the close of trading on Friday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Receptos as a hold. 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 and solid stock price performance. However, as a counter to these strengths, we also find weaknesses including feeble growth in the company's earnings per share, deteriorating net income and weak operating cash flow.

Highlights from the ratings report include:
  • RCPT's very impressive revenue growth greatly exceeded the industry average of 40.9%. Since the same quarter one year prior, revenues leaped by 202.1%. 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.
  • RCPT's debt-to-equity ratio is very low at 0.10 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 14.86, which clearly demonstrates the ability to cover short-term cash needs.
  • Compared to other companies in the Biotechnology industry and the overall market, RECEPTOS INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • RECEPTOS INC's earnings per share declined by 35.2% in the most recent quarter compared to the same quarter a year ago. For the next year, the market is expecting a contraction of 66.1% in earnings (-$4.54 versus -$2.73).
  • 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 106.6% when compared to the same quarter one year ago, falling from -$15.57 million to -$32.17 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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