Seattle Genetics (SGEN) Is Today's Strong On High 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 Seattle Genetics ( SGEN) as a strong on high relative volume candidate. In addition to specific proprietary factors, Trade-Ideas identified Seattle Genetics as such a stock due to the following factors:

  • SGEN has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $38.1 million.
  • SGEN has traded 102,796 shares today.
  • SGEN is trading at 2.02 times the normal volume for the stock at this time of day.
  • SGEN is trading at a new high 3.06% 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 SGEN:

Seattle Genetics, Inc., a biotechnology company, develops and commercializes antibody-based therapies for the treatment of cancer. Currently there are 5 analysts that rate Seattle Genetics a buy, 2 analysts rate it a sell, and 4 rate it a hold.

The average volume for Seattle Genetics has been 1.1 million shares per day over the past 30 days. Seattle has a market cap of $4.3 billion and is part of the health care sector and drugs industry. The stock has a beta of 2.36 and a short float of 30.2% with 16.60 days to cover. Shares are up 5.9% year-to-date as of the close of trading on Friday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Seattle Genetics 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, disappointing return on equity and generally disappointing historical performance in the stock itself.

Highlights from the ratings report include:
  • SEATTLE GENETICS INC's earnings per share declined by 30.8% in the most recent quarter compared to the same quarter a year ago. Earnings per share have declined over the last two years. We anticipate that this should continue in the coming year. During the past fiscal year, SEATTLE GENETICS INC reported poor results of -$0.62 versus -$0.52 in the prior year. For the next year, the market is expecting a contraction of 12.1% in earnings (-$0.70 versus -$0.62).
  • 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 Biotechnology industry average. The net income has significantly decreased by 33.0% when compared to the same quarter one year ago, falling from -$16.30 million to -$21.69 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, SEATTLE GENETICS INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • The share price of SEATTLE GENETICS INC has not done very well: it is down 10.76% and has underperformed the S&P 500, in part reflecting the company's sharply declining earnings per share when compared to the year-earlier quarter. The fact that the stock is now selling for less than others in its industry in relation to its current earnings is not reason enough to justify a buy rating at this time.
  • The gross profit margin for SEATTLE GENETICS INC is currently very high, coming in at 89.80%. Regardless of SGEN's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, SGEN's net profit margin of -26.40% significantly underperformed when compared to the industry average.

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