Vanda Pharmaceuticals (VNDA) Is Strong 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 Vanda Pharmaceuticals ( VNDA) as a strong on high relative volume candidate. In addition to specific proprietary factors, Trade-Ideas identified Vanda Pharmaceuticals as such a stock due to the following factors:

  • VNDA has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $11.4 million.
  • VNDA has traded 420,635 shares today.
  • VNDA is trading at 9.15 times the normal volume for the stock at this time of day.
  • VNDA is trading at a new high 5.08% above yesterday's close.

'Strong on High Relative Volume' stocks are worth watching because major volume moves tend to indicate underlying activity such as M&A events, material stock news, analyst upgrades, insider buying, buying from 'superinvestors,' or that hedge funds and momentum traders are piling into 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. 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 VNDA:

Vanda Pharmaceuticals Inc., a biopharmaceutical company, focuses on the development and commercialization of products for the treatment of central nervous system disorders. VNDA has a PE ratio of 12. Currently there are 3 analysts that rate Vanda Pharmaceuticals a buy, no analysts rate it a sell, and none rate it a hold.

The average volume for Vanda Pharmaceuticals has been 761,500 shares per day over the past 30 days. Vanda has a market cap of $542.5 million and is part of the health care sector and drugs industry. The stock has a beta of 2.76 and a short float of 22.7% with 11.09 days to cover. Shares are down 9.9% year-to-date as of the close of trading on Tuesday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Vanda 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 stock has had a generally disappointing performance in the past year.

Highlights from the ratings report include:
  • VNDA's very impressive revenue growth greatly exceeded the industry average of 22.2%. Since the same quarter one year prior, revenues leaped by 142.3%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • VNDA 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 4.86, which clearly demonstrates the ability to cover short-term cash needs.
  • Net operating cash flow has significantly increased by 123.23% to $5.56 million when compared to the same quarter last year. Despite an increase in cash flow, VANDA PHARMACEUTICALS INC's cash flow growth rate is still lower than the industry average growth rate of 156.02%.
  • VANDA 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 year. However, we anticipate underperformance relative to this pattern in the coming year. During the past fiscal year, VANDA PHARMACEUTICALS INC turned its bottom line around by earning $0.30 versus -$0.68 in the prior year. For the next year, the market is expecting a contraction of 430.0% in earnings (-$0.99 versus $0.30).
  • VNDA has underperformed the S&P 500 Index, declining 11.49% from its price level of one year ago. The fact that the stock is now selling for less than others in its industry in relation to its current earnings is not reason enough to justify a buy rating at this time.

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