Today's Dead Cat Bounce Stock: Pernix Therapeutics Holdings (PTX)

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

  • PTX has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $13.0 million.
  • PTX has traded 134,250 shares today.
  • PTX is up 3.6% today.
  • PTX was down 7% yesterday.

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More details on PTX:

Pernix Therapeutics Holdings, Inc., a specialty pharmaceutical company, develops, manufactures, markets, and sells branded and generic pharmaceutical products. Currently there are 4 analysts that rate Pernix Therapeutics Holdings a buy, no analysts rate it a sell, and 1 rates it a hold.

The average volume for Pernix Therapeutics Holdings has been 973,000 shares per day over the past 30 days. Pernix has a market cap of $263.3 million and is part of the health care sector and drugs industry. The stock has a beta of 3.15 and a short float of 44.1% with 4.44 days to cover. Shares are down 26.9% year-to-date as of the close of trading on Thursday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Pernix Therapeutics Holdings as a sell. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income, generally high debt management risk, disappointing return on equity 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 underperformed when compared to that of the S&P 500 and greatly underperformed compared to the Pharmaceuticals industry average. The net income has significantly decreased by 25.6% when compared to the same quarter one year ago, falling from -$6.22 million to -$7.82 million.
  • The debt-to-equity ratio is very high at 3.50 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. Along with the unfavorable debt-to-equity ratio, PTX maintains a poor quick ratio of 0.86, which illustrates the inability to avoid short-term cash problems.
  • 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, PERNIX THERAPEUTICS HOLDINGS's return on equity significantly trails that of both the industry average and the S&P 500.
  • PERNIX THERAPEUTICS HOLDINGS's earnings per share declined by 25.0% in the most recent quarter compared to the same quarter a year ago. The company has reported a trend of declining earnings per share over the past two years. However, the consensus estimate suggests that this trend should reverse in the coming year. During the past fiscal year, PERNIX THERAPEUTICS HOLDINGS reported poor results of -$0.93 versus -$0.70 in the prior year. This year, the market expects an improvement in earnings ($0.50 versus -$0.93).
  • The gross profit margin for PERNIX THERAPEUTICS HOLDINGS is currently very high, coming in at 72.80%. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of -14.38% is in-line with the industry average.

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