Trade-Ideas: Allergan (AGN) Is Today's Unusual Social Activity Stock

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 Allergan ( AGN) as an unusual social activity candidate. In addition to specific proprietary factors, Trade-Ideas identified Allergan as such a stock due to the following factors:

  • AGN has more that 20x the normal benchmarked social activity for this time of the day compared to its average of 1.26 mentions/day.
  • AGN has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $365.8 million.

Identifying stocks with 'Unusual Social Activity' tends to be a valuable process for traders looking to capitalize on the 'talk of the town' stocks that are basking in far more attention from the StockTwits financial community than normal. Good press? Bad press? It ultimately doesn't matter if it's good or bad if you know how to trade around the sentiment. Certain hedge funds use such data for their proprietary algorithms and it is not uncommon to see shared social sentiment play itself out in a stock's price trend.

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More details on AGN:

Actavis plc develops, manufactures, and sells generic, brand, and biosimilar pharmaceuticals. It offers over-the-counter products. The company also provides biosimilar products in women's health, oncology, and other therapeutic categories. The stock currently has a dividend yield of 0.1%. AGN has a PE ratio of 47. Currently there are 4 analysts that rate Allergan a buy, no analysts rate it a sell, and 11 rate it a hold.

The average volume for Allergan has been 2.2 million shares per day over the past 30 days. Allergan has a market cap of $72.1 billion and is part of the health care sector and drugs industry. Shares are up 13% year-to-date as of the close of trading on Friday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Allergan as a hold. The company's strengths can be seen in multiple areas, such as its robust revenue growth, solid stock price performance and good cash flow from operations. However, as a counter to these strengths, we also find weaknesses including deteriorating net income and feeble growth in the company's earnings per share.

Highlights from the ratings report include:
  • AGN's very impressive revenue growth greatly exceeded the industry average of 2.0%. Since the same quarter one year prior, revenues leaped by 59.5%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • Compared to its closing price of one year ago, AGN's share price has jumped by 44.18%, 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.
  • The debt-to-equity ratio is somewhat low, currently at 0.62, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels. Although the company had a strong debt-to-equity ratio, its quick ratio of 0.80 is somewhat weak and could be cause for future problems.
  • ACTAVIS PLC 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. The company has reported a trend of declining earnings per share over the past two years. However, the consensus estimate suggests that this trend should reverse in the coming year. During the past fiscal year, ACTAVIS PLC reported poor results of -$5.88 versus -$5.43 in the prior year. This year, the market expects an improvement in earnings ($17.81 versus -$5.88).
  • 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 Pharmaceuticals industry. The net income has significantly decreased by 630.6% when compared to the same quarter one year ago, falling from $96.50 million to -$512.00 million.

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