Regulus Therapeutics (RGLS): Today's Weak On High Volume Stock

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

  • RGLS has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $4.5 million.
  • RGLS has traded 908,606 shares today.
  • RGLS is trading at 21.30 times the normal volume for the stock at this time of day.
  • RGLS is trading at a new low 15.02% 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 RGLS:

Regulus Therapeutics Inc., a biopharmaceutical company, focuses on the discovery and development of drugs that target microRNAs for the treatment of various diseases in the United States. Currently there are 4 analysts that rate Regulus Therapeutics a buy, no analysts rate it a sell, and none rate it a hold.

The average volume for Regulus Therapeutics has been 577,000 shares per day over the past 30 days. Regulus has a market cap of $720.4 million and is part of the health care sector and drugs industry. The stock has a beta of 1.34 and a short float of 24.9% with 18.59 days to cover. Shares are down 12% year-to-date as of the close of trading on Monday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Regulus Therapeutics as a sell. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income, disappointing return on equity and weak operating cash flow.

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 compared to the Biotechnology industry average, but is greater than that of the S&P 500. The net income has decreased by 13.7% when compared to the same quarter one year ago, dropping from -$12.74 million to -$14.49 million.
  • 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, REGULUS THERAPEUTICS INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • Net operating cash flow has decreased to -$11.25 million or 24.62% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
  • REGULUS THERAPEUTICS INC's earnings per share improvement from the most recent quarter was slightly positive. 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, REGULUS THERAPEUTICS INC reported poor results of -$1.32 versus -$0.58 in the prior year. This year, the market expects an improvement in earnings (-$1.16 versus -$1.32).
  • Investors have driven up the company's shares by 96.52% over the past year, a rise that has exceeded that of the S&P 500 Index. Regarding the future course of this stock, we feel that the risks involved in investing in RGLS do not compensate for any future upside potential, despite the fact that it has seen nice gains over the past 12 months.

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