Trade-Ideas: Tetraphase Pharmaceuticals (TTPH) Is Today's

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 Tetraphase Pharmaceuticals ( TTPH) as a "barbarian at the gate" (strong stocks crossing above resistance with today's range greater than 200%) candidate. In addition to specific proprietary factors, Trade-Ideas identified Tetraphase Pharmaceuticals as such a stock due to the following factors:

  • TTPH has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $22.7 million.
  • TTPH has traded 729,053 shares today.
  • TTPH traded in a range 221.7% of the normal price range with a price range of $4.71.
  • TTPH traded above its daily resistance level (quality: 531 days, meaning that the stock is crossing a resistance level set by the last 531 calendar days. The resistance price is defined by the Price - $0.01 at the time of the signal).

Stocks matching the 'Barbarian at the Gate' criteria are worthwhile stocks to watch for a variety of factors including historical back testing and volatility. Trade-Ideas targets these opportunities because the stock is exhibiting an unusual behavior while displaying positive price action. In this case, the stock crossed an important inflection point; namely, 'resistance' while at the same time the range of the stock's movement in price is more than twice its normal size. This large range foreshadows a possible continuation as the stock moves higher.

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More details on TTPH:

Tetraphase Pharmaceuticals, Inc., a clinical-stage biopharmaceutical company, develops various antibiotics for the treatment of serious and life-threatening multi-drug resistant infections. Currently there are 8 analysts that rate Tetraphase Pharmaceuticals a buy, no analysts rate it a sell, and none rate it a hold.

The average volume for Tetraphase Pharmaceuticals has been 624,000 shares per day over the past 30 days. Tetraphase has a market cap of $1.5 billion and is part of the health care sector and drugs industry. The stock has a beta of 0.63 and a short float of 10.2% with 5.54 days to cover. Shares are up 2% year-to-date as of the close of trading on Tuesday.

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TheStreetRatings.com Analysis:

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

Highlights from the ratings report include:
  • TETRAPHASE PHARMACEUTICALS's earnings per share declined by 24.5% in the most recent quarter compared to 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, TETRAPHASE PHARMACEUTICALS reported poor results of -$2.48 versus -$1.38 in the prior year. For the next year, the market is expecting a contraction of 4.2% in earnings (-$2.59 versus -$2.48).
  • 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 Pharmaceuticals industry. The net income has significantly decreased by 55.2% when compared to the same quarter one year ago, falling from -$13.52 million to -$20.99 million.
  • 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 Pharmaceuticals industry and the overall market, TETRAPHASE PHARMACEUTICALS'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, TTPH's share price has jumped by 357.48%, 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 TTPH do not compensate for any future upside potential, despite the fact that it has seen nice gains over the past 12 months.
  • TTPH 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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