Today's Weak On High Volume Stock: Prothena (PRTA)

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

  • PRTA has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $25.0 million.
  • PRTA has traded 90,227 shares today.
  • PRTA is trading at 3.65 times the normal volume for the stock at this time of day.
  • PRTA is trading at a new low 3.09% 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 PRTA:

Prothena Corporation plc, a late-stage clinical biotechnology company, focuses on the discovery, development, and commercialization of protein immunotherapy programs for the treatment of diseases that involve amyloid or cell adhesion in Ireland. Currently there are 4 analysts that rate Prothena a buy, 1 analyst rates it a sell, and none rate it a hold.

The average volume for Prothena has been 585,100 shares per day over the past 30 days. Prothena has a market cap of $1.4 billion and is part of the health care sector and drugs industry. The stock has a beta of 0.54 and a short float of 13.6% with 4.93 days to cover. Shares are up 116.5% year-to-date as of the close of trading on Friday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Prothena as a hold. The company's strengths can be seen in multiple areas, such as its solid stock price performance and largely solid financial position with reasonable debt levels by most measures. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, disappointing return on equity and weak operating cash flow.

Highlights from the ratings report include:
  • Compared to its closing price of one year ago, PRTA's share price has jumped by 120.45%, exceeding the performance of the broader market during that same time frame. Regarding the stock's future course, our hold rating indicates that we do not recommend additional investment in this stock despite its gains in the past year.
  • PRTA 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. Along with this, the company maintains a quick ratio of 29.47, which clearly demonstrates the ability to cover short-term cash needs.
  • PRTA, with its very weak revenue results, has greatly underperformed against the industry average of 21.6%. Since the same quarter one year prior, revenues plummeted by 98.2%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • Current return on equity is lower than its ROE from the same quarter one year prior. This is a clear sign of weakness within the company. Compared to other companies in the Biotechnology industry and the overall market, PROTHENA CORP PLC's return on equity significantly trails that of both the industry average and the S&P 500.
  • Net operating cash flow has significantly decreased to -$14.72 million or 182.26% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.

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