Theravance (THRX) Weak On High Volume 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 Theravance ( THRX) as a weak on high relative volume candidate. In addition to specific proprietary factors, Trade-Ideas identified Theravance as such a stock due to the following factors:

  • THRX has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $7.4 million.
  • THRX has traded 78,571 shares today.
  • THRX is trading at 2.10 times the normal volume for the stock at this time of day.
  • THRX is trading at a new low 4.14% 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 THRX:

Theravance, Inc., a royalty management company, is focused on developing respiratory products. The stock currently has a dividend yield of 5.9%. Currently there are no analysts that rate Theravance a buy, 1 analyst rates it a sell, and 4 rate it a hold.

The average volume for Theravance has been 762,100 shares per day over the past 30 days. Theravance has a market cap of $2.0 billion and is part of the health care sector and drugs industry. The stock has a beta of 2.79 and a short float of 80.9% with 60.45 days to cover. Shares are up 19.4% year-to-date as of the close of trading on Friday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Theravance as a sell. The company's weaknesses can be seen in multiple areas, such as its poor profit margins and generally disappointing historical performance in the stock itself.

Highlights from the ratings report include:
  • The gross profit margin for THERAVANCE INC is currently extremely low, coming in at 11.19%. It has decreased significantly from the same period last year. Along with this, the net profit margin of -154.68% is significantly below that of the industry average.
  • THRX'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 26.00%, 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.
  • THERAVANCE INC has improved earnings per share by 40.0% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, THERAVANCE INC reported poor results of -$0.66 versus -$0.30 in the prior year. This year, the market expects an improvement in earnings (-$0.15 versus -$0.66).
  • The company, on the basis of net income growth from the same quarter one year ago, has significantly outperformed against the S&P 500 and exceeded that of the Pharmaceuticals industry average. The net income increased by 84.2% when compared to the same quarter one year prior, rising from -$67.70 million to -$10.67 million.
  • Net operating cash flow has significantly increased by 96.80% to -$1.62 million when compared to the same quarter last year. In addition, THERAVANCE INC has also vastly surpassed the industry average cash flow growth rate of -20.90%.

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