NxStage Medical (NXTM) Weak On High Volume

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

  • NXTM has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $10.4 million.
  • NXTM has traded 646,569 shares today.
  • NXTM is trading at 11.43 times the normal volume for the stock at this time of day.
  • NXTM is trading at a new low 3.01% 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 NXTM:

NxStage Medical, Inc., a medical device company, develops, manufactures, and markets products for the treatment of kidney failure, fluid overload, and related blood treatments and procedures. Currently there are 4 analysts that rate NxStage Medical a buy, 1 analyst rates it a sell, and 1 rates it a hold.

The average volume for NxStage Medical has been 426,000 shares per day over the past 30 days. NxStage Medical has a market cap of $1.1 billion and is part of the health care sector and health services industry. The stock has a beta of 0.28 and a short float of 7% with 6.80 days to cover. Shares are down 7.3% year-to-date as of the close of trading on Friday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates NxStage Medical as a hold. The company's strengths can be seen in multiple areas, such as its revenue growth, solid stock price performance and good cash flow from operations. However, as a counter to these strengths, we also find weaknesses including deteriorating net income and disappointing return on equity.

Highlights from the ratings report include:
  • The revenue growth came in higher than the industry average of 1.1%. Since the same quarter one year prior, revenues rose by 10.1%. This growth in revenue does not appear to have trickled down to the company's bottom line, displaying stagnant earnings per share.
  • Compared to its closing price of one year ago, NXTM's share price has jumped by 48.16%, exceeding the performance of the broader market during that same time frame. Regarding the stock's future course, our hold rating indicates that we do not recommend additional investment in this stock despite its gains in the past year.
  • 47.57% is the gross profit margin for NXSTAGE MEDICAL INC which we consider to be strong. Regardless of NXTM's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, NXTM's net profit margin of -7.11% significantly underperformed when compared to the industry average.
  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed compared to the Health Care Equipment & Supplies industry average, but is greater than that of the S&P 500. The net income has decreased by 7.3% when compared to the same quarter one year ago, dropping from -$5.28 million to -$5.66 million.
  • The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. Compared to other companies in the Health Care Equipment & Supplies industry and the overall market, NXSTAGE MEDICAL INC's return on equity significantly trails that of both the industry average and the S&P 500.

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