Today's Weak On High Volume Stock: Nektar Therapeutics (NKTR)

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

  • NKTR has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $12.9 million.
  • NKTR has traded 164,990 shares today.
  • NKTR is trading at 2.30 times the normal volume for the stock at this time of day.
  • NKTR is trading at a new low 3.07% 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 NKTR:

Nektar Therapeutics, a biopharmaceutical company, develops drug candidates that utilize its PEGylation and polymer conjugate technology platforms in the United States. Its product pipeline includes drug candidates in therapeutic areas comprising oncology, pain, anti-infectives, and immunology. NKTR has a PE ratio of 57. Currently there are 7 analysts that rate Nektar Therapeutics a buy, 1 analyst rates it a sell, and none rate it a hold.

The average volume for Nektar Therapeutics has been 1.7 million shares per day over the past 30 days. Nektar 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 1.31 and a short float of 17.1% with 12.84 days to cover. Shares are down 26.4% year-to-date as of the close of trading on Friday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Nektar Therapeutics as a hold. The company's strengths can be seen in multiple areas, such as its notable return on equity, robust revenue growth and good cash flow from operations. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself and generally higher debt management risk.

Highlights from the ratings report include:
  • When compared to other companies in the Pharmaceuticals industry and the overall market, NEKTAR THERAPEUTICS's return on equity exceeds that of the industry average and significantly exceeds that of the S&P 500.
  • NKTR's very impressive revenue growth greatly exceeded the industry average of 2.1%. Since the same quarter one year prior, revenues leaped by 450.3%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • 42.29% is the gross profit margin for NEKTAR THERAPEUTICS which we consider to be strong. It has increased significantly from the same period last year. Regardless of the strong results of the gross profit margin, the net profit margin of 31.08% trails the industry average.
  • The debt-to-equity ratio is very high at 3.32 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. Despite the company's weak debt-to-equity ratio, the company has managed to keep a very strong quick ratio of 4.36, which shows the ability to cover short-term cash needs.
  • NKTR has underperformed the S&P 500 Index, declining 8.38% from its price level of one year ago. Looking ahead, other than the push or pull of the broad market, we do not see anything in the company's numbers that may help reverse the decline experienced over the past 12 months. Despite the past decline, the stock is still selling for more than most others in its industry.

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