Today's Dead Cat Bounce Stock Is Anacor Pharmaceuticals (ANAC)

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

  • ANAC has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $42.7 million.
  • ANAC has traded 51,396 shares today.
  • ANAC is up 3% today.
  • ANAC was down 5.1% yesterday.

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More details on ANAC:

Anacor Pharmaceuticals, Inc., a biopharmaceutical company, focuses on discovering, developing, and commercializing novel small-molecule therapeutics derived from its boron chemistry platform. It markets KERYDIN (tavaborole) topical solution for the treatment of onychomycosis of the toenails. Currently there are 4 analysts that rate Anacor Pharmaceuticals a buy, no analysts rate it a sell, and none rate it a hold.

The average volume for Anacor Pharmaceuticals has been 648,700 shares per day over the past 30 days. Anacor has a market cap of $2.4 billion and is part of the health care sector and drugs industry. The stock has a beta of 1.78 and a short float of 13.9% with 5.79 days to cover. Shares are up 69.6% year-to-date as of the close of trading on Wednesday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Anacor Pharmaceuticals as a sell. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income, disappointing return on equity, weak operating cash flow and feeble growth in its earnings per share.

Highlights from the ratings report include:
  • 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 107.7% when compared to the same quarter one year ago, falling from $130.75 million to -$10.12 million.
  • 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, ANACOR PHARMACEUTICALS INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • Net operating cash flow has significantly decreased to -$15.58 million or 112.30% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
  • ANACOR PHARMACEUTICALS INC 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. The company has reported a trend of declining earnings per share over the past year. However, the consensus estimate suggests that this trend should reverse in the coming year. During the past fiscal year, ANACOR PHARMACEUTICALS INC swung to a loss, reporting -$2.07 versus $1.82 in the prior year. This year, the market expects an improvement in earnings (-$1.54 versus -$2.07).
  • ANAC's debt-to-equity ratio of 0.72 is somewhat low overall, but it is high when compared to the industry average, implying that the management of the debt levels should be evaluated further. Even though the debt-to-equity ratio shows mixed results, the company's quick ratio of 5.35 is very high and demonstrates very strong liquidity.

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