Merrimack Pharmaceuticals (MACK) Strong On High Relative Volume Today

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 Merrimack Pharmaceuticals ( MACK) as a strong on high relative volume candidate. In addition to specific proprietary factors, Trade-Ideas identified Merrimack Pharmaceuticals as such a stock due to the following factors:

  • MACK has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $17.6 million.
  • MACK has traded 129,462 shares today.
  • MACK is trading at 2.01 times the normal volume for the stock at this time of day.
  • MACK is trading at a new high 6.04% above yesterday's close.

'Strong on High Relative Volume' stocks are worth watching because major volume moves tend to indicate underlying activity such as M&A events, material stock news, analyst upgrades, insider buying, buying from 'superinvestors,' or that hedge funds and momentum traders are piling into 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. 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 MACK:

Merrimack Pharmaceuticals, Inc., a biopharmaceutical company, engages in discovering, developing, and preparing to commercialize medicines paired with companion diagnostics for the treatment of cancer primarily in the United States. Currently there are 5 analysts that rate Merrimack Pharmaceuticals a buy, no analysts rate it a sell, and none rate it a hold.

The average volume for Merrimack Pharmaceuticals has been 1.4 million shares per day over the past 30 days. Merrimack 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 1.28 and a short float of 19.5% with 10.90 days to cover. Shares are up 6.4% year-to-date as of the close of trading on Thursday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Merrimack Pharmaceuticals as a sell. Among the areas we feel are negative, one of the most important has been weak operating cash flow.

Highlights from the ratings report include:
  • Net operating cash flow has decreased to -$31.69 million or 15.53% 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 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 70.7% when compared to the same quarter one year prior, rising from -$33.06 million to -$9.70 million.
  • MERRIMACK PHARMACEUTICALS reported significant earnings per share improvement 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, MERRIMACK PHARMACEUTICALS continued to lose money by earning -$0.80 versus -$1.32 in the prior year. For the next year, the market is expecting a contraction of 16.9% in earnings (-$0.94 versus -$0.80).
  • This stock has increased by 177.84% over the past year, outperforming the rise in the S&P 500 Index during the same period. Regarding the future course of this stock, we feel that the risks involved in investing in MACK do not compensate for any future upside potential, despite the fact that it has seen nice gains over the past 12 months.
  • MACK's very impressive revenue growth greatly exceeded the industry average of 36.4%. Since the same quarter one year prior, revenues leaped by 333.4%. Growth in the company's revenue appears to have helped boost the earnings per share.

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