Ironwood Pharmaceuticals (IRWD): Heavy Pre-Market Activity

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 Ironwood Pharmaceuticals ( IRWD) as a pre-market mover with heavy volume candidate. In addition to specific proprietary factors, Trade-Ideas identified Ironwood Pharmaceuticals as such a stock due to the following factors:

  • IRWD has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $26.5 million.
  • IRWD traded 532,301 shares today in the pre-market hours as of 9:12 AM, representing 23.4% of its average daily volume.

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More details on IRWD:

Ironwood Pharmaceuticals, Inc., a pharmaceutical company, engages in the research, development, and commercialization of human therapeutic products. Currently there are 2 analysts that rate Ironwood Pharmaceuticals a buy, 1 analyst rates it a sell, and 6 rate it a hold.

The average volume for Ironwood Pharmaceuticals has been 1.2 million shares per day over the past 30 days. Ironwood 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 1.11 and a short float of 18.4% with 5.99 days to cover. Shares are down 20.8% year-to-date as of the close of trading on Monday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Ironwood Pharmaceuticals as a sell. The company's weaknesses can be seen in multiple areas, such as its disappointing return on equity, generally disappointing historical performance in the stock itself and generally high debt management risk.

Highlights from the ratings report include:
  • 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, IRONWOOD PHARMACEUTICALS INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • The debt-to-equity ratio is very high at 2.56 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 4.17, which shows the ability to cover short-term cash needs.
  • IRWD has underperformed the S&P 500 Index, declining 12.51% 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.
  • The company, on the basis of net income growth 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 increased by 33.0% when compared to the same quarter one year prior, rising from -$49.63 million to -$33.22 million.
  • Net operating cash flow has increased to -$35.78 million or 38.19% when compared to the same quarter last year. Despite an increase in cash flow of 38.19%, IRONWOOD PHARMACEUTICALS INC is still growing at a significantly lower rate than the industry average of 155.59%.

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