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

  • LXRX has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $3.9 million.
  • LXRX has traded 94,955 shares today.
  • LXRX is trading at 6.85 times the normal volume for the stock at this time of day.
  • LXRX is trading at a new low 3.05% 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 LXRX:

Lexicon Pharmaceuticals, Inc., a biopharmaceutical company, focuses on the discovery and development of pharmaceutical products for the treatment of human diseases. Currently there are 3 analysts that rate Lexicon Pharmaceuticals a buy, 1 analyst rates it a sell, and 2 rate it a hold.

The average volume for Lexicon Pharmaceuticals has been 350,700 shares per day over the past 30 days. Lexicon has a market cap of $828.9 million and is part of the health care sector and drugs industry. The stock has a beta of 1.21 and a short float of 24.6% with 12.64 days to cover. Shares are up 25.6% year-to-date as of the close of trading on Thursday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Lexicon Pharmaceuticals as a sell. Among the areas we feel are negative, one of the most important has been a generally disappointing historical performance in the stock itself.

Highlights from the ratings report include:
  • LXRX's stock share price has done very poorly compared to where it was a year ago: Despite any rallies, the net result is that it is down by 30.85%, which is also worse that the performance of the S&P 500 Index. Investors have so far failed to pay much attention to the earnings improvements the company has managed to achieve over the last quarter. Naturally, the overall market trend is bound to be a significant factor. However, in one sense, the stock's sharp decline last year is a positive for future investors, making it cheaper (in proportion to its earnings over the past year) than most other stocks in its industry. But due to other concerns, we feel the stock is still not a good buy right now.
  • 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 8.9% when compared to the same quarter one year prior, going from -$30.84 million to -$28.08 million.
  • 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, LEXICON PHARMACEUTICALS INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • Net operating cash flow has increased to -$23.49 million or 22.54% when compared to the same quarter last year. Despite an increase in cash flow of 22.54%, LEXICON PHARMACEUTICALS INC is still growing at a significantly lower rate than the industry average of 155.59%.
  • Despite currently having a low debt-to-equity ratio of 0.42, it is higher than that of the industry average, inferring that management of debt levels may need to be evaluated further. Even though the debt-to-equity ratio shows mixed results, the company's quick ratio of 6.86 is very high and demonstrates very strong liquidity.

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