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 Salix Pharmaceuticals ( SLXP) as a pre-market leader candidate. In addition to specific proprietary factors, Trade-Ideas identified Salix Pharmaceuticals as such a stock due to the following factors:

  • SLXP has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $301.3 million.
  • SLXP traded 18,073 shares today in the pre-market hours as of 8:44 AM.
  • SLXP is up 2.2% today from yesterday's close.

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More details on SLXP:

Salix Pharmaceuticals, Ltd. acquires, develops, and commercializes prescription drugs and medical devices to treat various gastrointestinal diseases in the United States. Currently there are 8 analysts that rate Salix Pharmaceuticals a buy, no analysts rate it a sell, and 6 rate it a hold.

The average volume for Salix Pharmaceuticals has been 1.8 million shares per day over the past 30 days. Salix has a market cap of $9.1 billion and is part of the health care sector and drugs industry. The stock has a beta of 0.55 and a short float of 25.9% with 6.00 days to cover. Shares are up 24.7% year-to-date as of the close of trading on Wednesday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Salix Pharmaceuticals as a hold. The company's strengths can be seen in multiple areas, such as its robust revenue growth, solid stock price performance and good cash flow from operations. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, generally higher debt management risk and disappointing return on equity.

Highlights from the ratings report include:
  • The revenue growth greatly exceeded the industry average of 15.1%. Since the same quarter one year prior, revenues rose by 48.9%. 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.
  • Compared to its closing price of one year ago, SLXP's share price has jumped by 46.43%, exceeding the performance of the broader market during that same time frame. Although SLXP had significant growth over the past year, our hold rating indicates that we do not recommend additional investment in this stock at the current time.
  • SALIX PHARMACEUTICALS LTD has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from 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, SALIX PHARMACEUTICALS LTD increased its bottom line by earning $2.14 versus $1.01 in the prior year. This year, the market expects an improvement in earnings ($3.94 versus $2.14).
  • The debt-to-equity ratio is very high at 5.57 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. To add to this, SLXP has a quick ratio of 0.59, this demonstrates the lack of ability of the company to cover short-term liquidity needs.
  • 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 Pharmaceuticals industry and the overall market, SALIX PHARMACEUTICALS LTD's return on equity significantly trails that of both the industry average and the S&P 500.

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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