Receptos (RCPT) In A Perilous Reversal

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

  • RCPT has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $124.1 million.
  • RCPT has traded 129,649 shares today.
  • RCPT is down 3.4% today.
  • RCPT was up 6.9% yesterday.

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More details on RCPT:

Receptos, Inc., a clinical-stage biopharmaceutical company, focuses on the discovery, development, and commercialization of therapeutics in immune disorders. Currently there are 3 analysts that rate Receptos a buy, no analysts rate it a sell, and none rate it a hold.

The average volume for Receptos has been 839,800 shares per day over the past 30 days. Receptos has a market cap of $4.9 billion and is part of the health care sector and drugs industry. Shares are up 27.4% year-to-date as of the close of trading on Tuesday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Receptos as a hold. The company's strengths can be seen in multiple areas, such as its solid stock price performance, largely solid financial position with reasonable debt levels by most measures and notable return on equity. However, as a counter to these strengths, we also find weaknesses including feeble growth in the company's earnings per share, deteriorating net income and weak operating cash flow.

Highlights from the ratings report include:
  • RCPT has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign. Along with this, the company maintains a quick ratio of 23.60, which clearly demonstrates the ability to cover short-term cash needs.
  • Compared to its closing price of one year ago, RCPT's share price has jumped by 336.04%, 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.
  • RCPT, with its very weak revenue results, has greatly underperformed against the industry average of 21.4%. Since the same quarter one year prior, revenues plummeted by 100.0%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • RECEPTOS 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, RECEPTOS INC reported poor results of -$4.56 versus -$2.73 in the prior year. For the next year, the market is expecting a contraction of 19.1% in earnings (-$5.43 versus -$4.56).
  • 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 150.3% when compared to the same quarter one year ago, falling from -$15.24 million to -$38.15 million.

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