Trade-Ideas: Intercept Pharmaceuticals (ICPT) Is Today's Weak On High Relative 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 Intercept Pharmaceuticals ( ICPT) as a weak on high relative volume candidate. In addition to specific proprietary factors, Trade-Ideas identified Intercept Pharmaceuticals as such a stock due to the following factors:

  • ICPT has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $81.7 million.
  • ICPT has traded 80,345 shares today.
  • ICPT is trading at 3.27 times the normal volume for the stock at this time of day.
  • ICPT is trading at a new low 3.13% below yesterday's close.

'Weak on High Relative Volume' stocks are worth watching because major volume moves tend to indicate underlying activity such as material stock news, analyst downgrades, insider selling, selling from 'superinvestors,' or that hedge funds and traders are piling out of 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 (or avoid losses by trimming weak positions). 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 ICPT:

Intercept Pharmaceuticals, Inc., a development stage biopharmaceutical company, focuses on the discovery, development, and commercialization of novel therapeutics to treat chronic liver and intestinal diseases utilizing its proprietary bile acid chemistry. Currently there are 8 analysts that rate Intercept Pharmaceuticals a buy, no analysts rate it a sell, and 2 rate it a hold.

The average volume for Intercept Pharmaceuticals has been 510,600 shares per day over the past 30 days. Intercept has a market cap of $6.2 billion and is part of the health care sector and drugs industry. The stock has a beta of -8.97 and a short float of 21.5% with 7.79 days to cover. Shares are up 63.9% year-to-date as of the close of trading on Monday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Intercept 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 significantly decreased to -$29.59 million or 140.25% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
  • Compared to other companies in the Biotechnology industry and the overall market, INTERCEPT PHARMA INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • After a year of stock price fluctuations, the net result is that ICPT's price has not changed very much. Although its weak earnings growth may have played a role in this flat result, don't lose sight of the fact that the performance of the overall market, as measured by the S&P 500 Index, was essentially similar. Turning our attention to the future direction of the stock, we do not believe this stock offers ample reward opportunity to compensate for the risks, despite the fact that it rose over the past year.
  • INTERCEPT PHARMA INC reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, INTERCEPT PHARMA INC reported poor results of -$14.42 versus -$3.70 in the prior year. This year, the market expects an improvement in earnings (-$8.54 versus -$14.42).
  • The company, on the basis of net income growth from the same quarter one year ago, has significantly outperformed against the S&P 500 and exceeded that of the Biotechnology industry average. The net income increased by 84.0% when compared to the same quarter one year prior, rising from -$246.03 million to -$39.39 million.

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