Watch Out: Barbarians At The Gate For ZIOPHARM Oncology (ZIOP)

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 ZIOPHARM Oncology ( ZIOP) as a "barbarian at the gate" (strong stocks crossing above resistance with today's range greater than 200%) candidate. In addition to specific proprietary factors, Trade-Ideas identified ZIOPHARM Oncology as such a stock due to the following factors:

  • ZIOP has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $30.1 million.
  • ZIOP has traded 2.5 million shares today.
  • ZIOP traded in a range 211.9% of the normal price range with a price range of $1.12.
  • ZIOP traded above its daily resistance level (quality: 6 days, meaning that the stock is crossing a resistance level set by the last 6 calendar days. The resistance price is defined by the Price - $0.01 at the time of the signal).

Stocks matching the 'Barbarian at the Gate' criteria are worthwhile stocks to watch for a variety of factors including historical back testing and volatility. Trade-Ideas targets these opportunities because the stock is exhibiting an unusual behavior while displaying positive price action. In this case, the stock crossed an important inflection point; namely, 'resistance' while at the same time the range of the stock's movement in price is more than twice its normal size. This large range foreshadows a possible continuation as the stock moves higher.

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More details on ZIOP:

ZIOPHARM Oncology, Inc., a biotechnology company, employs gene expression, control, and cell technologies to deliver cell-based therapies for the treatment of cancer. Currently there are 2 analysts that rate ZIOPHARM Oncology a buy, no analysts rate it a sell, and 2 rate it a hold.

The average volume for ZIOPHARM Oncology has been 3.9 million shares per day over the past 30 days. ZIOPHARM Oncology has a market cap of $1.3 billion and is part of the health care sector and drugs industry. The stock has a beta of 0.71 and a short float of 27.9% with 10.42 days to cover. Shares are up 90.7% year-to-date as of the close of trading on Thursday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates ZIOPHARM Oncology as a sell. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income, weak operating cash flow and feeble growth in its earnings per share.

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 when compared to that of the S&P 500 and the Biotechnology industry. The net income has significantly decreased by 705.6% when compared to the same quarter one year ago, falling from -$9.71 million to -$78.23 million.
  • Net operating cash flow has decreased to -$9.72 million or 12.28% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
  • ZIOPHARM ONCOLOGY INC has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. This company has reported somewhat volatile earnings recently. We feel it is likely to report a decline in earnings in the coming year. During the past fiscal year, ZIOPHARM ONCOLOGY INC continued to lose money by earning -$0.32 versus -$0.66 in the prior year. For the next year, the market is expecting a contraction of 117.2% in earnings (-$0.70 versus -$0.32).
  • The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. Compared to other companies in the Biotechnology industry and the overall market, ZIOPHARM ONCOLOGY INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • ZIOP 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 12.37, which clearly demonstrates the ability to cover short-term cash needs.

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