Immunogen (IMGN) Showing Signs Of Perilous Reversal Today

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

  • IMGN has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $12.9 million.
  • IMGN has traded 814,726 shares today.
  • IMGN is down 3.3% today.
  • IMGN was up 6.5% yesterday.

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More details on IMGN:

ImmunoGen, Inc., a biotechnology company, develops targeted anticancer therapeutics. It develops its products using its antibody-drug conjugates technology. The company offers Kadcyla, an antibody-drug conjugate for the treatment of HER2-positive metastatic breast cancer. Currently there are 4 analysts that rate Immunogen a buy, 2 analysts rate it a sell, and 5 rate it a hold.

The average volume for Immunogen has been 1.5 million shares per day over the past 30 days. Immunogen has a market cap of $737.7 million and is part of the health care sector and drugs industry. The stock has a beta of 0.95 and a short float of 19% with 7.80 days to cover. Shares are up 40.3% year-to-date as of the close of trading on Wednesday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Immunogen as a sell. The company's weaknesses can be seen in multiple areas, such as its disappointing return on equity and generally disappointing historical performance in the stock itself.

Highlights from the ratings report include:
  • 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, IMMUNOGEN INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • IMGN's stock share price has done very poorly compared to where it was a year ago: Despite any rallies, the net result is that it is down by 28.42%, which is also worse that the performance of the S&P 500 Index. Investors have so far failed to pay much attention to the earnings improvements the company has managed to achieve over the last quarter. Naturally, the overall market trend is bound to be a significant factor. However, in one sense, the stock's sharp decline last year is a positive for future investors, making it cheaper (in proportion to its earnings over the past year) than most other stocks in its industry. But due to other concerns, we feel the stock is still not a good buy right now.
  • 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 42.3% when compared to the same quarter one year prior, rising from -$37.45 million to -$21.62 million.
  • IMMUNOGEN INC has improved earnings per share by 43.2% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past year. We feel that this trend should continue. This trend suggests that the performance of the business is improving. During the past fiscal year, IMMUNOGEN INC continued to lose money by earning -$0.84 versus -$0.87 in the prior year. This year, the market expects an improvement in earnings (-$0.71 versus -$0.84).
  • IMGN 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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