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Biggest Healthcare Sector Movers for June 25, 2012
The Nasdaq has declined 2%, the S&P 500 has fallen 1.7% and the Dow has slipped 1.3% on a bad morning for the market. The healthcare sector is the category of stocks relating to medical and healthcare goods or services. This sector includes hospital management firms, health maintenance organizations (HMOs), biotechnology and a variety of medical products. Stocks in the healthcare sector are often considered to be defensive because the products and services are essential. Even during economic downturns, people will still require medical aid and medicine to overcome illness. Having a consistent demand for goods and services makes this sector less sensitive to business cycle fluctuations.
The Healthcare sector (XLV) is down 1.1%, outperforming the market overall. Currently, the biggest movers in the sector are:
Broker Summary: TD Ameritrade Thinkorswim
Shares of Momenta Pharmaceuticals (Nasdaq:MNTA) are currently trading at $13.81, a steep decline of 18.8%. The company is currently trading a volume of 1.3 million shares. In technical analysis, trading volume is used to determine the strength of a market indicator. Profit-margin ratios measure how much money a company squeezes from its total revenue or total sales. Investors can look at a company's gross profit margin, operating profit margin and net margin to understand a company's profitability. Operating margin for MNTA is -21.8%. This shows that the company reported a net operating loss in the most recent quarter.
Valuation ratios allow the investor to make a quick determination as to a company's investment value. The debt ratio measures the leverage of a company, and a company's leverage is a good way to assess risk. MNTA has a low debt ratio of 11.5%. This indicates that the company engages in conservative financing with opportunities to borrow in the future at no significant risk. However, one thing to note with this ratio: it isn't a pure measure of a company's debt (or indebtedness), as it also includes operational liabilities, such as accounts payable and taxes payable.
Taking a 11.4% hit, Impax Laboratories (Nasdaq:IPXL) is currently trading at $20.24 per share. The company's volume is currently 816,865 shares for the day, 1.6 times the current daily average. The trading volume for a stock indicates the level of investor interest. Profit-margin ratios can give investors deeper insight into management efficiency than earnings alone can provide. Gross profit margin, operating profit margin and net margin are commonly used margins. IPXL has a gross profit margin of 52.7%. As with other margin ratios, the operating margin is a percentage, which allows for more standardized comparison across time and among different companies of different sizes. Operating profit margin for IPXL is 14.4%. Net profit margin is a good ratio for determining how a company is performing. Net margin is 12%.
Investment valuation ratios can be very useful in estimating whether a stock price is too high, reasonable or a bargain investment opportunity. A price/sales ratio is derived by dividing stock market price by company sales. IPXL's P/S ratio of 3.09 is on the high side. This could be a good sign if the share price increases. It is important to keep in mind when looking at the P/S ratio that just because a company is generating revenues, this does not mean that the company is profitable, and in the long run, profits drive stock prices.
Shire Plc (Nasdaq:SHPGY) is currently trading at $81.60 per share, after a steep drop of 10.7%. The company is trading at a volume of two million shares. This is more trading activity than there was yesterday. Volume is an important indicator in technical analysis as it is used to measure the worth of a market move. If the markets have made strong price move either up or down the perceived strength of that move depends on the volume for that period. The higher the volume during that price move the more significant the move. Margin analysis tells us how effectively management can wring profits from sales and how much room a company has to withstand a downturn, fend off competition and make mistakes. SHPGY has a relatively high gross profit margin of 92.9%. A high gross profit margin generally means that the company can make a reasonable profit on sales, provided that overhead costs do not increase. Relative to its gross profit margin, SHPGY's operating profit margin of 25.2% and net profit margin of 20% are high.
Looking at a company's valuation ratios is a good way of getting a basic idea as to its value as an investment. The price/earnings to growth (PEG) ratio compares a company's P/E ratio to its earnings-per-share growth rate, which tells you whether or not you are a good value when purchasing a stock with a high price/earnings ratio (P/E ratio). SHPGY has a PEG ratio of 1.49, which is consistent with the industry average. Because of the adjustment for earnings growth rate, the PEG ratio is somewhat more useful than many formulas for comparing companies in different industries.
Teva (NYSE:TEVA) has risen 5.6% to hit a current price of $40.15 per share. With 7.7 million shares changing hands so far today, the company's volume is 1.7 times its average over the past three months. Volume is used to evaluate how meaningful the price movement of a stock is. Calculating the profit margin is a great way to gain insight into aspects of how well a company generates and retains money. Instead of measuring how much managers earn from assets, equity or invested capital, profit-margin ratios measure how far a company stretches its total revenue or total sales. TEVA has a gross profit margin of 58.2%. The operating profit margin indicates how much EBIT is generated per dollar of sales. TEVA has an operating profit margin of 18.2%. Net profit margin compares net income with sales. The company has a net profit margin of 14.8%.
It is important for an investor to estimate the value of any potential or existing investment; valuation ratios make this easier. The price/book value ratio is one of the more common methods of determining whether a stock is fairly valued. TEVA's P/B ratio of 1.52 shows that its share price is higher than its book value. It is important to take the company's debt into account when using the P/B ratio as debt can boost a company's liabilities to the point where they wipe out much of the book value of its hard assets, creating artificially high P/B values. All else being equal, a stock with a low P/B value ratio is more attractive than a stock with a high ratio. SEE: Using The Price-To-Book Ratio To Evaluate Companies
At $83.40, Medivation (Nasdaq:MDVN) has slipped 4.1%. This morning, the company is trading a volume of 209,404 shares. If a stock price makes a big move up or down, volume lets us know the significance of that move. Margin analysis is a great way to understand the profitability of companies. MDVN has a low gross profit margin of -16.9%. Investors should track gross profit margin ratios over several years in order to see if earnings are consistent, growing or declining. Relative to its gross profit margin, MDVN's operating profit margin of 3% and net profit margin of -36.3% are low.
A company's value as an investment is more easily estimated using valuation ratios such as the price to earnings (P/E) ratio, the price to earnings growth (PEG) ratio, the price to sales (P/S) ratio, the price to book (P/B) ratio, and the dividend yield. The debt ratio is calculated by dividing total liabilities by total assets. The debt ratio for MDVN is 80.8%, which is relatively high. This might mean that the company now has low borrowing capacity, which reduces it's financial flexibility. As with all financial ratios, a company's debt ratio should be compared with the industry average or similar companies.
Life Technologies (Nasdaq:LIFE) is currently trading at a share price of $42.82, a 3.7% decline. At 787,541 shares, the company's volume so far today is 0.6 times the average daily volume. If a stock is trading on low volume, then there is not much interest in the stock. On the other hand, if a stock is trading on high volume, then there is a lot of interest in the stock. There are many tools investors can use to evaluate a stock, including margins. Margins, quite simply, are earnings expressed as a ratio, or a percentage of sales, and this allows investors to compare the profitability of different companies, while net earnings, which are presented as an absolute number, cannot. LIFE's gross profit margin is 67.7%. While ratios such as price/earnings (P/E) or price/book value look at the relative attractiveness of a stock, the net profit margin ratio focuses on company performance rather that stock market valuation. Net margin is 10.9%, which is high relative to its gross profit margin. This usually means that it also has one or more advantages over its competition. Operating margin is determined by taking operating income (income minus variable expenses) and dividing it by sales. Operating profit margin for LIFE is 21%.
Understanding investment valuation ratios allows the investor to assess the true value of an individual stock. The debt-equity (D/E) ratio is a measurement of how much suppliers, lenders, creditors and obligors have committed to the company versus what the shareholders have committed. LIFE's D/E ratio is 54%. The D/E ratio percentage provides a much more dramatic perspective on a company's leverage position than the debt ratio percentage.
Vertex Pharmaceuticals (Nasdaq:VRTX) has decreased to $58.67 per share, a 3.2% fall. The company's volume is currently 420,488 shares. Trading activity is down from yesterday when three million shares changed hands. Volume indicates the level of interest that investors have in a company at its current price. Profit-margin ratios measure how much money a company squeezes from its total revenue or total sales. Investors can look at a company's gross profit margin, operating profit margin and net margin to understand a company's profitability. VRTX's gross profit margin of 93.4% is fairly high. Since gross profit margins tend to stay stable, sudden changes may indicate financial fraud, accounting irregularities or problems in the business. Operating margin for VRTX is 20.9% and net margin is 16.7%, both high relative to its gross margin.
When estimating the value of a particular investment, valuation ratios provide a good basis for assessing the value of an individual stock. The capitalization ratio is calculated by dividing long-term debt by the sum of long-term debt and shareholders' equity. VRTX has a capitalization ratio of 30.1%. This ratio is considered to be one of the more meaningful of the "debt" ratios - it delivers the key insight into the use of leverage by a company.
The Bottom Line No matter the economic climate, Wall Street will always have stocks that make major moves each week. Daily stock performance should be weighed against historical performance and put in context of the market overall. Keep in mind that all these ratios should be compared against historical numbers and industry information in order to get a more complete picture.
The Healthcare sector (XLV) is down 1.1%, outperforming the market overall. Currently, the biggest movers in the sector are:
| Company | Market Cap | Percentage Change |
| Momenta Pharmaceuticals, Inc. (Nasdaq:MNTA) | $876.4 million | -18.8% |
| Impax Laboratories Inc (Nasdaq:IPXL) | $1.53 billion | -11.4% |
| Shire Plc. (ADR) (Nasdaq:SHPGY) | $17.13 billion | -10.7% |
| Teva Pharmaceutical Industries Ltd (ADR) (NYSE:TEVA) | $35.77 billion | +5.6% |
| Medivation, Inc. (Nasdaq:MDVN) | $3.15 billion | -4.1% |
| Life Technologies (Nasdaq:LIFE) | $7.94 billion | -3.7% |
| Vertex Pharmaceuticals Incorporated (Nasdaq:VRTX) | $12.79 billion | -3.2% |
Shares of Momenta Pharmaceuticals (Nasdaq:MNTA) are currently trading at $13.81, a steep decline of 18.8%. The company is currently trading a volume of 1.3 million shares. In technical analysis, trading volume is used to determine the strength of a market indicator. Profit-margin ratios measure how much money a company squeezes from its total revenue or total sales. Investors can look at a company's gross profit margin, operating profit margin and net margin to understand a company's profitability. Operating margin for MNTA is -21.8%. This shows that the company reported a net operating loss in the most recent quarter.
Valuation ratios allow the investor to make a quick determination as to a company's investment value. The debt ratio measures the leverage of a company, and a company's leverage is a good way to assess risk. MNTA has a low debt ratio of 11.5%. This indicates that the company engages in conservative financing with opportunities to borrow in the future at no significant risk. However, one thing to note with this ratio: it isn't a pure measure of a company's debt (or indebtedness), as it also includes operational liabilities, such as accounts payable and taxes payable.
Taking a 11.4% hit, Impax Laboratories (Nasdaq:IPXL) is currently trading at $20.24 per share. The company's volume is currently 816,865 shares for the day, 1.6 times the current daily average. The trading volume for a stock indicates the level of investor interest. Profit-margin ratios can give investors deeper insight into management efficiency than earnings alone can provide. Gross profit margin, operating profit margin and net margin are commonly used margins. IPXL has a gross profit margin of 52.7%. As with other margin ratios, the operating margin is a percentage, which allows for more standardized comparison across time and among different companies of different sizes. Operating profit margin for IPXL is 14.4%. Net profit margin is a good ratio for determining how a company is performing. Net margin is 12%.
Investment valuation ratios can be very useful in estimating whether a stock price is too high, reasonable or a bargain investment opportunity. A price/sales ratio is derived by dividing stock market price by company sales. IPXL's P/S ratio of 3.09 is on the high side. This could be a good sign if the share price increases. It is important to keep in mind when looking at the P/S ratio that just because a company is generating revenues, this does not mean that the company is profitable, and in the long run, profits drive stock prices.
Shire Plc (Nasdaq:SHPGY) is currently trading at $81.60 per share, after a steep drop of 10.7%. The company is trading at a volume of two million shares. This is more trading activity than there was yesterday. Volume is an important indicator in technical analysis as it is used to measure the worth of a market move. If the markets have made strong price move either up or down the perceived strength of that move depends on the volume for that period. The higher the volume during that price move the more significant the move. Margin analysis tells us how effectively management can wring profits from sales and how much room a company has to withstand a downturn, fend off competition and make mistakes. SHPGY has a relatively high gross profit margin of 92.9%. A high gross profit margin generally means that the company can make a reasonable profit on sales, provided that overhead costs do not increase. Relative to its gross profit margin, SHPGY's operating profit margin of 25.2% and net profit margin of 20% are high.
Looking at a company's valuation ratios is a good way of getting a basic idea as to its value as an investment. The price/earnings to growth (PEG) ratio compares a company's P/E ratio to its earnings-per-share growth rate, which tells you whether or not you are a good value when purchasing a stock with a high price/earnings ratio (P/E ratio). SHPGY has a PEG ratio of 1.49, which is consistent with the industry average. Because of the adjustment for earnings growth rate, the PEG ratio is somewhat more useful than many formulas for comparing companies in different industries.
Teva (NYSE:TEVA) has risen 5.6% to hit a current price of $40.15 per share. With 7.7 million shares changing hands so far today, the company's volume is 1.7 times its average over the past three months. Volume is used to evaluate how meaningful the price movement of a stock is. Calculating the profit margin is a great way to gain insight into aspects of how well a company generates and retains money. Instead of measuring how much managers earn from assets, equity or invested capital, profit-margin ratios measure how far a company stretches its total revenue or total sales. TEVA has a gross profit margin of 58.2%. The operating profit margin indicates how much EBIT is generated per dollar of sales. TEVA has an operating profit margin of 18.2%. Net profit margin compares net income with sales. The company has a net profit margin of 14.8%.
At $83.40, Medivation (Nasdaq:MDVN) has slipped 4.1%. This morning, the company is trading a volume of 209,404 shares. If a stock price makes a big move up or down, volume lets us know the significance of that move. Margin analysis is a great way to understand the profitability of companies. MDVN has a low gross profit margin of -16.9%. Investors should track gross profit margin ratios over several years in order to see if earnings are consistent, growing or declining. Relative to its gross profit margin, MDVN's operating profit margin of 3% and net profit margin of -36.3% are low.
A company's value as an investment is more easily estimated using valuation ratios such as the price to earnings (P/E) ratio, the price to earnings growth (PEG) ratio, the price to sales (P/S) ratio, the price to book (P/B) ratio, and the dividend yield. The debt ratio is calculated by dividing total liabilities by total assets. The debt ratio for MDVN is 80.8%, which is relatively high. This might mean that the company now has low borrowing capacity, which reduces it's financial flexibility. As with all financial ratios, a company's debt ratio should be compared with the industry average or similar companies.
Life Technologies (Nasdaq:LIFE) is currently trading at a share price of $42.82, a 3.7% decline. At 787,541 shares, the company's volume so far today is 0.6 times the average daily volume. If a stock is trading on low volume, then there is not much interest in the stock. On the other hand, if a stock is trading on high volume, then there is a lot of interest in the stock. There are many tools investors can use to evaluate a stock, including margins. Margins, quite simply, are earnings expressed as a ratio, or a percentage of sales, and this allows investors to compare the profitability of different companies, while net earnings, which are presented as an absolute number, cannot. LIFE's gross profit margin is 67.7%. While ratios such as price/earnings (P/E) or price/book value look at the relative attractiveness of a stock, the net profit margin ratio focuses on company performance rather that stock market valuation. Net margin is 10.9%, which is high relative to its gross profit margin. This usually means that it also has one or more advantages over its competition. Operating margin is determined by taking operating income (income minus variable expenses) and dividing it by sales. Operating profit margin for LIFE is 21%.
Understanding investment valuation ratios allows the investor to assess the true value of an individual stock. The debt-equity (D/E) ratio is a measurement of how much suppliers, lenders, creditors and obligors have committed to the company versus what the shareholders have committed. LIFE's D/E ratio is 54%. The D/E ratio percentage provides a much more dramatic perspective on a company's leverage position than the debt ratio percentage.
Vertex Pharmaceuticals (Nasdaq:VRTX) has decreased to $58.67 per share, a 3.2% fall. The company's volume is currently 420,488 shares. Trading activity is down from yesterday when three million shares changed hands. Volume indicates the level of interest that investors have in a company at its current price. Profit-margin ratios measure how much money a company squeezes from its total revenue or total sales. Investors can look at a company's gross profit margin, operating profit margin and net margin to understand a company's profitability. VRTX's gross profit margin of 93.4% is fairly high. Since gross profit margins tend to stay stable, sudden changes may indicate financial fraud, accounting irregularities or problems in the business. Operating margin for VRTX is 20.9% and net margin is 16.7%, both high relative to its gross margin.
When estimating the value of a particular investment, valuation ratios provide a good basis for assessing the value of an individual stock. The capitalization ratio is calculated by dividing long-term debt by the sum of long-term debt and shareholders' equity. VRTX has a capitalization ratio of 30.1%. This ratio is considered to be one of the more meaningful of the "debt" ratios - it delivers the key insight into the use of leverage by a company.
The Bottom Line No matter the economic climate, Wall Street will always have stocks that make major moves each week. Daily stock performance should be weighed against historical performance and put in context of the market overall. Keep in mind that all these ratios should be compared against historical numbers and industry information in order to get a more complete picture.
by
Investopedia Staff
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