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.

Trade-Ideas LLC identified Nektar Therapeutics ( NKTR) as a weak on high relative volume candidate. In addition to specific proprietary factors, Trade-Ideas identified Nektar Therapeutics as such a stock due to the following factors:

  • NKTR has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $18.4 million.
  • NKTR has traded 368,877 shares today.
  • NKTR is trading at 6.19 times the normal volume for the stock at this time of day.
  • NKTR is trading at a new low 5.04% below yesterday's close.

'Weak on High Relative Volume' stocks are worth watching because major volume moves tend to indicate underlying activity such as material stock news, analyst downgrades, insider selling, selling from 'superinvestors,' or that hedge funds and traders are piling out of a stock ahead of a catalyst. Regardless of the impetus behind the price and volume action, when a stock moves with strength and volume it can indicate the start of a new trend on which early investors can capitalize (or avoid losses by trimming weak positions). In the event of a well-timed trading opportunity, combining technical indicators with fundamental trends and a disciplined trading methodology should help you take the first steps towards investment success.

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More details on NKTR:

Nektar Therapeutics, a clinical-stage biopharmaceutical company, develops drug candidates that utilize its PEGylation and polymer conjugate technology platforms in the United States. Currently there are 7 analysts that rate Nektar Therapeutics a buy, 1 analyst rates it a sell, and none rate it a hold.

The average volume for Nektar Therapeutics has been 959,800 shares per day over the past 30 days. Nektar has a market cap of $1.9 billion and is part of the health care sector and drugs industry. The stock has a beta of 1.34 and a short float of 12.5% with 8.28 days to cover. Shares are down 19.3% year-to-date as of the close of trading on Wednesday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Nektar Therapeutics as a sell. The company's weaknesses can be seen in multiple areas, such as its weak operating cash flow and generally high debt management risk.

Highlights from the ratings report include:
  • Net operating cash flow has significantly decreased to -$24.63 million or 145.91% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
  • The debt-to-equity ratio is very high at 6.99 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. Despite the company's weak debt-to-equity ratio, the company has managed to keep a very strong quick ratio of 4.16, which shows the ability to cover short-term cash needs.
  • In its most recent trading session, NKTR 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. Turning our attention to the future direction of the stock, we do not believe this stock offers ample reward opportunity to compensate for the risks, despite the fact that it rose over the past year.
  • NEKTAR THERAPEUTICS has improved earnings per share by 14.6% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. However, we anticipate underperformance relative to this pattern in the coming year. During the past fiscal year, NEKTAR THERAPEUTICS continued to lose money by earning -$0.45 versus -$1.40 in the prior year. For the next year, the market is expecting a contraction of 3.3% in earnings (-$0.47 versus -$0.45).
  • NKTR, with its decline in revenue, underperformed when compared the industry average of 10.3%. Since the same quarter one year prior, revenues fell by 37.2%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.

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