Perilous Reversal Stock: Supernus Pharmaceuticals (SUPN)

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 Supernus Pharmaceuticals ( SUPN) as a "perilous reversal" (up big yesterday but down big today) candidate. In addition to specific proprietary factors, Trade-Ideas identified Supernus Pharmaceuticals as such a stock due to the following factors:

  • SUPN has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $42.2 million.
  • SUPN has traded 220,039 shares today.
  • SUPN is down 3% today.
  • SUPN was up 6.7% yesterday.

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More details on SUPN:

Supernus Pharmaceuticals, Inc., a specialty pharmaceutical company, focuses on the development and commercialization of products for the treatment of central nervous system diseases in the United States. SUPN has a PE ratio of 22. Currently there are 5 analysts that rate Supernus Pharmaceuticals a buy, no analysts rate it a sell, and 1 rates it a hold.

The average volume for Supernus Pharmaceuticals has been 1.0 million shares per day over the past 30 days. Supernus has a market cap of $764.7 million and is part of the health care sector and drugs industry. The stock has a beta of 0.81 and a short float of 6.4% with 0.86 days to cover. Shares are up 92.9% year-to-date as of the close of trading on Thursday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Supernus Pharmaceuticals 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 notable return on equity. However, as a counter to these strengths, we find that the growth in the company's earnings per share has not been good.

Highlights from the ratings report include:
  • SUPN's very impressive revenue growth greatly exceeded the industry average of 2.1%. Since the same quarter one year prior, revenues leaped by 209.8%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • SUPN's debt-to-equity ratio is very low at 0.12 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Along with this, the company maintains a quick ratio of 3.13, which clearly demonstrates the ability to cover short-term cash needs.
  • SUPERNUS PHARMACEUTICALS INC reported significant earnings per share improvement 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, SUPERNUS PHARMACEUTICALS INC turned its bottom line around by earning $0.19 versus -$2.92 in the prior year. For the next year, the market is expecting a contraction of 21.1% in earnings ($0.15 versus $0.19).
  • The gross profit margin for SUPERNUS PHARMACEUTICALS INC is currently very high, coming in at 95.01%. Regardless of SUPN's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, SUPN's net profit margin of 3.25% is significantly lower than the industry average.

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