Today's Weak On High Volume Stock: Infinity Pharmaceuticals (INFI)

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

  • INFI has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $10.9 million.
  • INFI has traded 54,274 shares today.
  • INFI is trading at 2.38 times the normal volume for the stock at this time of day.
  • INFI is trading at a new low 4.01% 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 INFI:

Infinity Pharmaceuticals, Inc., a drug discovery and development company, discovers, develops, and delivers medicines to patients with difficult-to-treat diseases. Currently there are 6 analysts that rate Infinity Pharmaceuticals a buy, no analysts rate it a sell, and 3 rate it a hold.

The average volume for Infinity Pharmaceuticals has been 693,000 shares per day over the past 30 days. Infinity has a market cap of $637.6 million and is part of the health care sector and drugs industry. The stock has a beta of 2.08 and a short float of 11% with 4.50 days to cover. Shares are down 23% year-to-date as of the close of trading on Wednesday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Infinity Pharmaceuticals as a sell. The company's weaknesses can be seen in multiple areas, such as its unimpressive growth in net income and feeble growth in its earnings per share.

Highlights from the ratings report include:
  • 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 120.7% when compared to the same quarter one year ago, falling from -$42.27 million to -$93.30 million.
  • INFINITY PHARMACEUTICALS 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. This company has reported somewhat volatile earnings recently. We feel it is likely to report a decline in earnings in the coming year. During the past fiscal year, INFINITY PHARMACEUTICALS INC continued to lose money by earning -$0.45 versus -$2.64 in the prior year. For the next year, the market is expecting a contraction of 662.2% in earnings (-$3.43 versus -$0.45).
  • The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. Compared to other companies in the Biotechnology industry and the overall market, INFINITY PHARMACEUTICALS 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, INFI's share price has jumped by 43.42%, 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 INFI do not compensate for any future upside potential, despite the fact that it has seen nice gains over the past 12 months.
  • INFI 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.

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