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

  • SGMO has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $11.6 million.
  • SGMO has traded 83,026 shares today.
  • SGMO is trading at 2.33 times the normal volume for the stock at this time of day.
  • SGMO is trading at a new low 3.17% 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 SGMO:

Sangamo BioSciences, Inc., a clinical stage biopharmaceutical company, focuses on the research, development, and commercialization of engineered DNA-binding proteins as novel therapeutic products for unmet medical needs in the United States. Currently there are 6 analysts that rate Sangamo BioSciences a buy, no analysts rate it a sell, and none rate it a hold.

The average volume for Sangamo BioSciences has been 796,400 shares per day over the past 30 days. Sangamo BioSciences has a market cap of $855.9 million and is part of the health care sector and drugs industry. The stock has a beta of 2.97 and a short float of 14.7% with 8.97 days to cover. Shares are down 21.2% year-to-date as of the close of trading on Friday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Sangamo BioSciences as a hold. The company's strengths can be seen in multiple areas, such as its robust revenue growth, largely solid financial position with reasonable debt levels by most measures and impressive record of earnings per share growth. However, as a counter to these strengths, we also find weaknesses including weak operating cash flow and a generally disappointing performance in the stock itself.

Highlights from the ratings report include:
  • SGMO's very impressive revenue growth greatly exceeded the industry average of 21.9%. Since the same quarter one year prior, revenues leaped by 66.2%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • SGMO 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 10.18, which clearly demonstrates the ability to cover short-term cash needs.
  • SANGAMO BIOSCIENCES INC has improved earnings per share by 33.3% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. However, we anticipate underperformance relative to this pattern in the coming year. During the past fiscal year, SANGAMO BIOSCIENCES INC continued to lose money by earning -$0.39 versus -$0.47 in the prior year. For the next year, the market is expecting a contraction of 44.9% in earnings (-$0.57 versus -$0.39).
  • SGMO has underperformed the S&P 500 Index, declining 24.08% from its price level of one year ago. The fact that the stock is now selling for less than others in its industry in relation to its current earnings is not reason enough to justify a buy rating at this time.
  • Net operating cash flow has significantly decreased to -$2.39 million or 121.02% 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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