Perilous Reversal Stock: Array BioPharma (ARRY)

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 Array BioPharma ( ARRY) as a "perilous reversal" (up big yesterday but down big today) candidate. In addition to specific proprietary factors, Trade-Ideas identified Array BioPharma as such a stock due to the following factors:

  • ARRY has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $14.2 million.
  • ARRY has traded 79,426 shares today.
  • ARRY is down 3% today.
  • ARRY was up 13.1% yesterday.

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More details on ARRY:

Array BioPharma Inc., a biopharmaceutical company, focuses on the discovery, development, and commercialization of small molecule drugs to treat patients with cancer in North America, Europe, and the Asia Pacific. Currently there are 6 analysts that rate Array BioPharma a buy, no analysts rate it a sell, and none rate it a hold.

The average volume for Array BioPharma has been 2.2 million shares per day over the past 30 days. Array BioPharma has a market cap of $873.1 million and is part of the health care sector and drugs industry. The stock has a beta of 1.78 and a short float of 25% with 12.64 days to cover. Shares are up 33.6% year-to-date as of the close of trading on Friday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Array BioPharma as a sell. The area that we feel has been the company's primary weakness has been its deteriorating net income.

Highlights from the ratings report include:
  • 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 47.5% when compared to the same quarter one year prior, rising from -$16.41 million to -$8.61 million.
  • ARRAY BIOPHARMA INC reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, ARRAY BIOPHARMA INC reported poor results of -$0.68 versus -$0.57 in the prior year. This year, the market expects an improvement in earnings (-$0.07 versus -$0.68).
  • The gross profit margin for ARRAY BIOPHARMA INC is rather high; currently it is at 54.79%. It has increased significantly from the same period last year. Regardless of the strong results of the gross profit margin, the net profit margin of -31.98% is in-line with the industry average.
  • Net operating cash flow has significantly increased by 105.98% to $1.99 million when compared to the same quarter last year. In addition, ARRAY BIOPHARMA INC has also vastly surpassed the industry average cash flow growth rate of -4.91%.
  • This stock has increased by 57.03% 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 ARRY 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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