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

  • ARIA has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $35.9 million.
  • ARIA has traded 115,610 shares today.
  • ARIA is up 3.7% today.
  • ARIA was down 6.1% yesterday.

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More details on ARIA:

ARIAD Pharmaceuticals, Inc., an oncology company, is engaged in the discovery, development, and commercialization of medicines for cancer patients. Currently there are 6 analysts that rate ARIAD Pharmaceuticals a buy, no analysts rate it a sell, and 4 rate it a hold.

The average volume for ARIAD Pharmaceuticals has been 6.4 million shares per day over the past 30 days. ARIAD has a market cap of $1.3 billion and is part of the health care sector and drugs industry. The stock has a beta of 0.86 and a short float of 26.5% with 8.51 days to cover. Shares are up 0.9% year-to-date as of the close of trading on Monday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates ARIAD Pharmaceuticals as a sell. The company's weaknesses can be seen in multiple areas, such as its disappointing return on equity, generally disappointing historical performance in the stock itself and generally high debt management risk.

Highlights from the ratings report include:
  • Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Biotechnology industry and the overall market, ARIAD PHARMACEUTICALS INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • Currently the debt-to-equity ratio of 1.91 is quite high overall and when compared to the industry average, suggesting that the current management of debt levels should be re-evaluated. Despite the company's weak debt-to-equity ratio, the company has managed to keep a very strong quick ratio of 3.85, which shows the ability to cover short-term cash needs.
  • In its most recent trading session, ARIA has closed at a price level that was not very different from its closing price of one year earlier. This is probably due to its weak earnings growth as well as other mixed factors. The fact that the stock is now selling for less than others in its industry in relation to its current earnings is not reason enough to justify a buy rating at this time.
  • 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 24.5% when compared to the same quarter one year prior, going from -$66.34 million to -$50.11 million.
  • The revenue fell significantly faster than the industry average of 39.0%. Since the same quarter one year prior, revenues fell by 12.3%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.

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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