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

  • RPTP has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $22.7 million.
  • RPTP has traded 251,593 shares today.
  • RPTP is down 3.5% today.
  • RPTP was up 6.7% yesterday.

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More details on RPTP:

Raptor Pharmaceutical Corp., a biopharmaceutical company, focuses on developing and commercializing life-altering therapeutics that treat debilitating and often fatal diseases. Currently there are 3 analysts that rate Raptor Pharmaceutical a buy, 2 analysts rate it a sell, and none rate it a hold.

The average volume for Raptor Pharmaceutical has been 1.2 million shares per day over the past 30 days. Raptor has a market cap of $1.2 billion and is part of the health care sector and drugs industry. The stock has a beta of -0.27 and a short float of 20.4% with 8.68 days to cover. Shares are up 46.7% year-to-date as of the close of trading on Thursday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Raptor Pharmaceutical as a sell. The company's weaknesses can be seen in multiple areas, such as its unimpressive growth in net income and generally high debt management risk.

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 32.2% when compared to the same quarter one year ago, falling from -$14.89 million to -$19.68 million.
  • The debt-to-equity ratio is very high at 3.56 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. Despite the company's weak debt-to-equity ratio, the company has managed to keep a very strong quick ratio of 4.70, which shows 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 Biotechnology industry and the overall market, RAPTOR PHARMACEUTICAL CORP's return on equity significantly trails that of both the industry average and the S&P 500.
  • The gross profit margin for RAPTOR PHARMACEUTICAL CORP is currently very high, coming in at 83.57%. Regardless of RPTP's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, RPTP's net profit margin of -96.23% significantly underperformed when compared to the industry average.
  • Net operating cash flow has increased to -$14.74 million or 15.10% when compared to the same quarter last year. Despite an increase in cash flow of 15.10%, RAPTOR PHARMACEUTICAL CORP is still growing at a significantly lower rate than the industry average of 156.57%.

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