Today's Roof Leaker Stock Is Incyte (INCY)

Trade-Ideas LLC identified Incyte ( INCY) as a "roof leaker" (crossing below the 200-day simple moving average on higher than normal relative volume) candidate. In addition to specific proprietary factors, Trade-Ideas identified Incyte as such a stock due to the following factors:

  • INCY has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $77.5 million.
  • INCY has traded 377,540 shares today.
  • INCY is trading at 2.23 times the normal volume for the stock at this time of day.
  • INCY crossed below its 200-day simple moving average.

'Roof Leaker' stocks are worth watching because trading stocks that begin to experience a breakdown can lead to potentially massive losses. Once psychological and technical resistance barriers like the 200-day moving average are breached on higher than normal relative volume, the stock may then be subject to emotional selling from investors that can continue to drive the stock lower. Regardless of the impetus behind the price and volume action, when a stock moves with weakness and volume it can indicate the start of a new, potentially dangerous, trend.

EXCLUSIVE OFFER: Get the inside scoop on opportunities in INCY with the Ticky from Trade-Ideas. See the FREE profile for INCY NOW at Trade-Ideas

More details on INCY:

Incyte Corporation focuses on the discovery, development, and commercialization of proprietary therapeutics in oncology. It offers JAKAFI for the treatment of myelofibrosis and polycythemia vera cancers. INCY has a PE ratio of 339. Currently there are 11 analysts that rate Incyte a buy, no analysts rate it a sell, and 1 rates it a hold.

The average volume for Incyte has been 1.1 million shares per day over the past 30 days. Incyte has a market cap of $16.5 billion and is part of the health care sector and drugs industry. The stock has a beta of 0.65 and a short float of 4.2% with 5.01 days to cover. Shares are down 16.8% year-to-date as of the close of trading on Friday.

EXCLUSIVE OFFER: See inside Jim Cramer's multi-million dollar charitable trust portfolio to see the stocks he thinks could be potential winners. Click here to see his holdings for 14-days FREE.

TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Incyte as a hold. The company's strengths can be seen in multiple areas, such as its robust revenue growth, notable return on equity and good cash flow from operations. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself, poor profit margins and generally higher debt management risk.

Highlights from the ratings report include:
  • INCY's very impressive revenue growth greatly exceeded the industry average of 13.8%. Since the same quarter one year prior, revenues leaped by 65.4%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • INCYTE CORP 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 two years. We feel that this trend should continue. This trend suggests that the performance of the business is improving. During the past fiscal year, INCYTE CORP turned its bottom line around by earning $0.01 versus -$0.32 in the prior year. This year, the market expects an improvement in earnings ($0.02 versus $0.01).
  • The gross profit margin for INCYTE CORP is rather low; currently it is at 17.88%. Despite the low profit margin, it has increased significantly from the same period last year. Despite the mixed results of the gross profit margin, INCY's net profit margin of 9.12% is significantly lower than the industry average.
  • INCY has underperformed the S&P 500 Index, declining 16.47% from its price level of one year ago. Looking ahead, other than the push or pull of the broad market, we do not see anything in the company's numbers that may help reverse the decline experienced over the past 12 months. Despite the past decline, the stock is still selling for more than most others in its industry.

EXCLUSIVE OFFER: See inside Jim Cramer's multi-million dollar charitable trust portfolio to see the stocks he thinks could be potential winners. Click here to see his holdings for 14-days FREE.

More from Markets

Elon Musk 'Should Be Quiet,' as 'Funding Secured' Still a Legal Concern

Elon Musk 'Should Be Quiet,' as 'Funding Secured' Still a Legal Concern

Dow Posts Solid Gains as Turkey Crisis Stabilizes; Home Depot Wavers

Dow Posts Solid Gains as Turkey Crisis Stabilizes; Home Depot Wavers

Jim Cramer on Tapestry: Accessories Are the Hottest Area of Retail

Jim Cramer on Tapestry: Accessories Are the Hottest Area of Retail

Jim Cramer on Tuesday's Market Gains: Let's Not Get Carried Away

Jim Cramer on Tuesday's Market Gains: Let's Not Get Carried Away

Jim Cramer on Home Depot, Tapestry, Nordstrom and Square

Jim Cramer on Home Depot, Tapestry, Nordstrom and Square