After the morning's trading, the Nasdaq is trading up 0.4%, the S&P 500 remains relatively unchanged and the Dow is unchanged. 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) has climbed 0.2% so far today and here are its biggest movers:
|Company||Market Cap||Percentage Change|
|Dendreon Corporation (Nasdaq:DNDN)||$951.7 million||-19.1%|
|Amarin Corporation plc (ADR) (Nasdaq:AMRN)||$1.72 billion||-9.3%|
|Auxilium Pharmaceuticals, Inc. (Nasdaq:AUXL)||$1.25 billion||+8.6%|
|Impax Laboratories Inc (Nasdaq:IPXL)||$1.37 billion||+7.5%|
|AmerisourceBergen (NYSE:ABC)||$9.75 billion||+3.9%|
|Mednax Inc. (NYSE:MD)||$3.16 billion||+3.6%|
|Shire Plc. (ADR) (Nasdaq:SHPG)||$16.81 billion||-2.9%|
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Shares of Dendreon (Nasdaq:DNDN) are currently trading at $5, a steep decline of 19.1%. The company's volume for the day so far is 16.2 million shares, 3.2 times the average volume over the last three months. Volume is an important indicator because it indicates how significant a price shift is. Investment valuation ratios can be very useful in determining the value of a stock, but it is very important to keep in mind that while some financial ratios have general rules (or a broad application), in most instances it is a prudent practice to look at a company's historical performance and use peer company/industry comparisons to put any given company's ratio in perspective. The price/sales ratio measures a company's stock market price by its revenues. The P/S ratio for DNDN is 4.13, which is relatively high. This could be a good sign if the share price increases. A limitation of the P/S ratio is that the price component measures only stock market captialization, while sales are a function of the entire capital structure, potentially leading to wide differences between levered and unlevered companies.
At $11.53, Amarin Corporation plc (Nasdaq:AMRN) has slipped 9.3%. The company's volume is currently 11.8 million shares. Yesterday's volume was only 8.7 million shares. A stock's volume conveys how excited investors are about it. It is important for an investor to estimate the value of any potential or existing investment; valuation ratios make this easier. The easy-to-calculate debt ratio is helpful to investors looking for a quick take on the leverage for a company. AMRN has a debt ratio of 124.7%, which is on the high side. As such, the company is highly leveraged and not highly liquid. 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.
Auxilium Pharmaceuticals (Nasdaq:AUXL) has moved up 8.6% and is currently trading at $27.98 per share. So far today, the company's volume is 1.1 million shares, 3.1 times the average daily volume. High volume indicates a lot of investor interest while low volume indicates the opposite. Investment valuation ratios can be very useful in determining the value of a stock, but it is very important to keep in mind that while some financial ratios have general rules (or a broad application), in most instances it is a prudent practice to look at a company's historical performance and use peer company/industry comparisons to put any given company's ratio in perspective. The price/book value ratio is one of the more common methods of determining whether a stock is fairly valued. The P/B ratio for AUXL is 15.29, indicating that the stock is trading for more than its book value. This implies that investors expect management to create more value from a given set of assets and/or that the market value of the firm's assets is significantly higher than their accounting value. A weakness of the P/B value ratio is that while the price component is easily determined by looking at the stock quote, the book value component is more difficult to estimate and more open to individual interpretation and analysis. SEE: Investment Valuation Ratios: Price/Book Value Ratio
Impax Laboratories (Nasdaq:IPXL) is at $22.05 per share after an increase of 7.5%. So far today, 635,056 shares have changed hands. 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. Valuation ratios like 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 are useful in determining how attractive a potential or existing investment is. The price/sales ratio is used for spotting recovery situations or for double-checking that a company's growth has not become overvalued. The P/S ratio for IPXL is a high 3.09. In young companies, a high P/S ratio is a sign of sales growth that is expected to turn into earnings and cash flow. All things being equal, a low P/S ratio is good news for investors, while a very high one can be a warning sign.
Rising 3.9%, AmerisourceBergen (NYSE:ABC) is currently trading at $40.04 per share. So far today, the company's volume is 4.2 million shares, 1.5 times the current three-month average. 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 a 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. Valuation ratios include 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. ABC has a high debt ratio of 81.4%. This means that most of the company's assets are financed through debt. As with all financial ratios, a company's debt ratio should be compared with the industry average or similar companies.
Mednax (NYSE:MD) is at $66.59 per share after an increase of 3.6%. The company is trading at a volume of 228,044 shares. This is on pace to reach yesterday's trading volume of 486,751 shares. Volume is also used as a secondary indicator to help confirm what the price movement is suggesting. 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-equity (D/E) ratio is a leverage ratio. MD has a debt-equity ratio of 5%, which is on the low side. A low D/E ratio may be a sign that the company is not taking advantage of leverage to increase its profits. This easy-to-calculate ratio provides a general indication of a company's equity-liability relationship and is helpful to investors looking for a quick take on a company's leverage.
Falling 2.9%, Shire Plc (Nasdaq:SHPG) is currently at a share price of $87.09. So far today, the company's volume is 666,841 shares, 1.7 times the average daily volume. The trading volume for a stock indicates the level of investor interest. Investors can make use of valuation ratios to estimate whether a stock is fairly valued. The P/E ratio has been used for ages by analysts and still remains one of the most relevant pieces of stock valuation. SHPG's P/E ratio is 19.2. High P/E stocks could be "growth" stocks, while low PE stocks may be "value" stocks. SEE: Can Investors Trust the P/E Ratio?
The Bottom Line On any given day, a particular stock may see positive or negative change in its share price. It is important to weigh current activity against historical performance when making any investment decisions. However, these fundamental metrics must be analyzed with historic data, industry information in addition to firm specific financial statements.