POZEN (POZN) Showing Signs Of Perilous Reversal 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 POZEN ( POZN) as a "perilous reversal" (up big yesterday but down big today) candidate. In addition to specific proprietary factors, Trade-Ideas identified POZEN as such a stock due to the following factors:

  • POZN has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $15.3 million.
  • POZN has traded 102,934 shares today.
  • POZN is down 4.9% today.
  • POZN was up 7.5% yesterday.

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More details on POZN:

POZEN Inc., a pharmaceutical company, develops products for the treatment of acute and chronic pain, and pain related conditions in the United States and internationally. POZN has a PE ratio of 22. Currently there are 2 analysts that rate POZEN a buy, no analysts rate it a sell, and none rate it a hold.

The average volume for POZEN has been 408,500 shares per day over the past 30 days. POZEN has a market cap of $358.7 million and is part of the health care sector and drugs industry. The stock has a beta of 2.26 and a short float of 10.5% with 2.03 days to cover. Shares are up 44.6% year-to-date as of the close of trading on Friday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates POZEN as a hold. The company's strengths can be seen in multiple areas, such as its largely solid financial position with reasonable debt levels by most measures, notable return on equity and good cash flow from operations. However, as a counter to these strengths, we also find weaknesses including unimpressive growth in net income and poor profit margins.

Highlights from the ratings report include:
  • POZN 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 31.31, which clearly demonstrates the ability to cover short-term cash needs.
  • 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 Pharmaceuticals industry and the overall market, POZEN INC's return on equity significantly exceeds that of both the industry average and the S&P 500.
  • Looking at where the stock is today compared to one year ago, we find that it is not only higher, but it has also clearly outperformed the rise in the S&P 500 over the same period, despite the company's weak earnings results. Despite the fact that it has already risen in the past year, there is currently no conclusive evidence that warrants the purchase or sale of this stock.
  • 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 100.9% when compared to the same quarter one year ago, falling from $2.91 million to -$0.03 million.
  • The gross profit margin for POZEN INC is currently extremely low, coming in at 3.72%. It has decreased significantly from the same period last year. Along with this, the net profit margin of -0.61% is significantly below that of the industry average.

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