XOMA (XOMA) Is Today's Dead Cat Bounce Stock

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 XOMA ( XOMA) as a "dead cat bounce" (down big yesterday but up big today) candidate. In addition to specific proprietary factors, Trade-Ideas identified XOMA as such a stock due to the following factors:

  • XOMA has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $14.1 million.
  • XOMA has traded 184,260 shares today.
  • XOMA is up 3.1% today.
  • XOMA was down 9.8% yesterday.

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More details on XOMA:

XOMA Corporation discovers and develops antibody-based therapeutics in the United States, Europe, and the Asia Pacific. Currently there are 5 analysts that rate XOMA a buy, no analysts rate it a sell, and 1 rates it a hold.

The average volume for XOMA has been 2.1 million shares per day over the past 30 days. XOMA has a market cap of $430.7 million and is part of the health care sector and drugs industry. The stock has a beta of 4.43 and a short float of 15.5% with 2.85 days to cover. Shares are down 41.2% 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 XOMA as a sell. The company's weaknesses can be seen in multiple areas, such as its weak operating cash flow and generally disappointing historical performance in the stock itself.

Highlights from the ratings report include:
  • Net operating cash flow has decreased to -$15.80 million or 23.18% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
  • XOMA's stock share price has done very poorly compared to where it was a year ago: Despite any rallies, the net result is that it is down by 26.86%, which is also worse that the performance of the S&P 500 Index. Investors have so far failed to pay much attention to the earnings improvements the company has managed to achieve over the last quarter. Naturally, the overall market trend is bound to be a significant factor. However, in one sense, the stock's sharp decline last year is a positive for future investors, making it cheaper (in proportion to its earnings over the past year) than most other stocks in its industry. But due to other concerns, we feel the stock is still not a good buy right now.
  • The company, on the basis of net income growth from the same quarter one year ago, has significantly underperformed compared to the Biotechnology industry average, but is greater than that of the S&P 500. The net income increased by 51.4% when compared to the same quarter one year prior, rising from -$29.62 million to -$14.40 million.
  • The revenue fell significantly faster than the industry average of 40.9%. Since the same quarter one year prior, revenues fell by 18.6%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
  • XOMA CORP reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, XOMA CORP reported poor results of -$1.40 versus -$1.29 in the prior year. This year, the market expects an improvement in earnings (-$0.49 versus -$1.40).

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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