Perilous Reversal Stock: Momenta Pharmaceuticals (MNTA)

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

  • MNTA has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $21.7 million.
  • MNTA has traded 1.0 million shares today.
  • MNTA is down 3.8% today.
  • MNTA was up 6.7% yesterday.

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More details on MNTA:

Momenta Pharmaceuticals, Inc., a biotechnology company, focuses on developing generic versions of complex drugs, biosimilars, and novel therapeutics for oncology and autoimmune diseases. Currently there are 5 analysts that rate Momenta Pharmaceuticals a buy, 1 analyst rates it a sell, and 1 rates it a hold.

The average volume for Momenta Pharmaceuticals has been 1.1 million shares per day over the past 30 days. Momenta has a market cap of $1.4 billion and is part of the health care sector and drugs industry. The stock has a beta of 1.86 and a short float of 16.7% with 9.11 days to cover. Shares are up 90% year-to-date as of the close of trading on Thursday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Momenta Pharmaceuticals as a sell. Among the areas we feel are negative, one of the most important has been weak operating cash flow.

Highlights from the ratings report include:
  • Net operating cash flow has decreased to -$28.58 million or 41.40% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
  • The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Biotechnology industry and the overall market, MOMENTA PHARMACEUTICALS INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • 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 20.0% when compared to the same quarter one year prior, going from -$27.36 million to -$21.88 million.
  • The revenue fell significantly faster than the industry average of 21.9%. Since the same quarter one year prior, revenues fell by 20.6%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
  • MNTA 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 8.97, which clearly demonstrates the ability to cover short-term cash needs.

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