Trade-Ideas: Bluebird Bio (BLUE) Is Today's Weak On High Relative Volume Stock

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

  • BLUE has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $99.9 million.
  • BLUE has traded 273,412 shares today.
  • BLUE is trading at 8.29 times the normal volume for the stock at this time of day.
  • BLUE is trading at a new low 7.15% 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 BLUE:

bluebird bio, Inc., a clinical-stage biotechnology company, focuses on developing transformative gene therapies for severe genetic and rare diseases. Currently there are 9 analysts that rate bluebird bio a buy, no analysts rate it a sell, and none rate it a hold.

The average volume for bluebird bio has been 675,200 shares per day over the past 30 days. Bluebird bio has a market cap of $4.4 billion and is part of the health care sector and drugs industry. Shares are up 51.5% year-to-date as of the close of trading on Friday.

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TheStreetRatings.com Analysis:

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

Highlights from the ratings report include:
  • BLUEBIRD BIO 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. Earnings per share have declined over the last year. We anticipate that this should continue in the coming year. During the past fiscal year, BLUEBIRD BIO INC reported poor results of -$1.78 versus -$0.80 in the prior year. For the next year, the market is expecting a contraction of 55.6% in earnings (-$2.77 versus -$1.78).
  • 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 141.8% when compared to the same quarter one year ago, falling from -$8.08 million to -$19.54 million.
  • Net operating cash flow has significantly decreased to -$15.66 million or 187.14% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
  • Compared to other companies in the Biotechnology industry and the overall market, BLUEBIRD BIO INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • Compared to its closing price of one year ago, BLUE's share price has jumped by 572.67%, exceeding the performance of the broader market during that same time frame. Regarding the future course of this stock, we feel that the risks involved in investing in BLUE do not compensate for any future upside potential, despite the fact that it has seen nice gains over the past 12 months.

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