Merrimack Pharmaceuticals (MACK) Is Today's Strong On High Volume Stock

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

  • MACK has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $13.1 million.
  • MACK has traded 332,222 shares today.
  • MACK is trading at 7.46 times the normal volume for the stock at this time of day.
  • MACK is trading at a new high 7.06% 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 MACK:

Merrimack Pharmaceuticals, Inc., a biopharmaceutical company, engages in discovering, developing, and preparing to commercialize medicines paired with companion diagnostics for the treatment of cancer primarily in the United States. Currently there are 6 analysts that rate Merrimack Pharmaceuticals a buy, no analysts rate it a sell, and none rate it a hold.

The average volume for Merrimack Pharmaceuticals has been 1.3 million shares per day over the past 30 days. Merrimack 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 1.27 and a short float of 22% with 20.00 days to cover. Shares are up 8.9% year-to-date as of the close of trading on Wednesday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Merrimack Pharmaceuticals as a sell. The company's weaknesses can be seen in multiple areas, such as its unimpressive growth in net income, weak operating cash flow and feeble growth in its earnings per share.

Highlights from the ratings report include:
  • The company, on the basis of change in net income from the same quarter one year ago, has underperformed when compared to that of the S&P 500 and greatly underperformed compared to the Biotechnology industry average. The net income has significantly decreased by 26.0% when compared to the same quarter one year ago, falling from -$27.59 million to -$34.76 million.
  • Net operating cash flow has decreased to -$35.08 million or 11.76% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
  • MERRIMACK PHARMACEUTICALS's earnings per share declined by 18.5% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. We feel it is likely to report a decline in earnings in the coming year. During the past fiscal year, MERRIMACK PHARMACEUTICALS continued to lose money by earning -$0.80 versus -$1.32 in the prior year. For the next year, the market is expecting a contraction of 40.0% in earnings (-$1.12 versus -$0.80).
  • Compared to its closing price of one year ago, MACK's share price has jumped by 56.28%, exceeding the performance of the broader market during that same time frame. Regarding the future course of this stock, we feel that the risks involved in investing in MACK do not compensate for any future upside potential, despite the fact that it has seen nice gains over the past 12 months.
  • Despite its growing revenue, the company underperformed as compared with the industry average of 22.2%. Since the same quarter one year prior, revenues rose by 13.9%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.

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