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Big Movers on the Healthcare Sector Today, Including BMY
It's been a bad day for the market after the morning's trading. The Nasdaq has fallen 0.4%; the S&P 500 has declined 0.8%; and the Dow is trading down 0.8%. 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 currently lagging behind the overall market, down 1%, and its current biggest movers are:
Forex Broker Summary: Forex Capital Markets (FXCM)
Shares of AVEO Pharmaceuticals (Nasdaq:AVEO) are currently trading at $9.73, a steep decline of 26.8%. The company's volume is currently 708,117 shares for the day, 3.4 times the average volume over the last three months. 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. Investors can use valuation ratios as tools to estimate what kind of deal a particular investment is. To a large degree, the debt-equity (D/E) ratio provides another vantage point on a company's leverage position, in this case, comparing total liabilities to shareholders' equity, as opposed to total assets in the debt ratio. The debt-equity ratio of 13% is relatively low. 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.
After a precipitous drop of 22.6%, Incyte (Nasdaq:INCY) is now trading at a share price of $19.28. The company's volume for the day so far is 5.2 million shares. 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. While investment valuation ratios are useful tools in estimating the attractiveness of an investment, remember that it is important to look at a company's historical performance and compare the company ratios with its competitors and industry overall. The capitalization ratio measures the debt component of the capital structure, or capitalization of a company (i.e., the sum of long-term debt liabilities and shareholder equity) to support operations and growth. INCY has a high capitalization ratio of 490.3%. A high capitalization ratio is not necessarily bad since higher financial leverage can increase the return on a shareholder's investment. Prudent use of leverage (debt) increases the financial resources available to a company for growth and expansion.
Wright Medical Group (Nasdaq:WMGI) is trading at $20.06 per share, a significant rise of 10.2%. At 918,208 shares, the company's volume so far today is 2.9 times the average daily volume. Volume is an important indicator because it indicates how significant a price shift is. 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/book value ratio is one of the more common methods of determining whether a stock is fairly valued. WMGI's stock is trading for more than its book value with a P/B ratio of 1.66. This may be a sign that the company is overvalued. All else being equal, a stock with a low P/B value ratio is more attractive than a stock with a high ratio. SEE: Investment Valuation Ratios: Price/Book Value Ratio
After an increase of 7.8%, Gilead (Nasdaq:GILD) has reached a current price of $57.82. So far today, 16.8 million shares of the company's stock have changed hands. This is greater than yesterday's volume of 6.6 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. A simple P/E ratio can reveal the stock's real market value and show how the valuation compares to its industry group or a benchmark like the S&P 500 Index. Compared to the industry average of 11.37, GILD's P/E ratio of 16.2 is quite high. Generally speaking, the higher the P/E ratio, the higher the market expectations for a company's future performance. A high or low P/E ratio is not good or bad in and of itself, but a company trading with a high P/E ratio must continue to post strong financial performance or its stock price is likely to fall. SEE: The P/E Ratio: A Good Market-Timing Indicator
Masimo (Nasdaq:MASI) has fallen 7.4% and is currently trading at $20.65 per share. So far today, the company's volume is 603,539 shares, 1.7 times the current three-month average. The trading volume for a stock indicates the level of investor interest. Investment valuation ratios provide investors with an estimation, albeit a simplistic one, of the value of a stock. Using price/earnings ratios (P/E ratios) does not give an indication of whether or not an individual company's ratio is reasonable, a shortcoming that can be corrected by using the price/earnings to growth ratio (PEG ratio). PEG ratio for MASI is 1.24. Because of the adjustment for earnings growth rate, the PEG ratio is somewhat more useful than many formulas for comparing companies in different industries.
Bristol-Myers (NYSE:BMY) is down 7.2% to reach $33.02 per share. So far today, the company's volume is 16.5 million shares. In technical analysis, trading volume is used to determine the strength of a market indicator. Valuation ratios allow the investor to make a quick determination as to a company's investment value. The dividend yield is calculated by dividing a company's dividends per share by its stock price. BMY's dividend yield is 3.8%. It is important to remember that dividends are only one component of a stock's return and capital appreciation (or decline) must also be considered when evaluating a security. SEE: Investment Valuation Ratios: Dividend Yield
After rising 5.7%, STERIS (NYSE:STE) is currently trading at a share price of $31.70. So far today, the company's volume is 475,642 shares, 1.4 times the average daily volume. If a stock price makes a big move up or down, volume lets us know the significance of that move. A company's investment value can be 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 price/sales ratio measures a company's stock market value by its total revenues or alternatively, a company's price per share by its revenue per share. STE has a high P/S ratio of 1.3. In young companies, a high P/S ratio is a sign of sales growth that is expected to turn into earnings and cash flow. 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.
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. Tools like valuation ratios and profit margins, however, are only as useful as the context you put them in; remember to take historical data and competitor performance into account.
The Healthcare sector (XLV) is currently lagging behind the overall market, down 1%, and its current biggest movers are:
| Company | Market Cap | Percentage Change |
| AVEO Pharmaceuticals, Inc. (Nasdaq:AVEO) | $579.5 million | -26.8% |
| Incyte Corporation (Nasdaq:INCY) | $3.19 billion | -22.6% |
| Wright Medical Group, Inc. (Nasdaq:WMGI) | $715.4 million | +10.2% |
| Gilead Sciences (Nasdaq:GILD) | $40.61 billion | +7.8% |
| Masimo Corporation (Nasdaq:MASI) | $1.27 billion | -7.4% |
| Bristol-Myers Squibb (NYSE:BMY) | $59.77 billion | -7.2% |
| STERIS Corp (NYSE:STE) | $1.73 billion | +5.7% |
Shares of AVEO Pharmaceuticals (Nasdaq:AVEO) are currently trading at $9.73, a steep decline of 26.8%. The company's volume is currently 708,117 shares for the day, 3.4 times the average volume over the last three months. 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. Investors can use valuation ratios as tools to estimate what kind of deal a particular investment is. To a large degree, the debt-equity (D/E) ratio provides another vantage point on a company's leverage position, in this case, comparing total liabilities to shareholders' equity, as opposed to total assets in the debt ratio. The debt-equity ratio of 13% is relatively low. 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.
After a precipitous drop of 22.6%, Incyte (Nasdaq:INCY) is now trading at a share price of $19.28. The company's volume for the day so far is 5.2 million shares. 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. While investment valuation ratios are useful tools in estimating the attractiveness of an investment, remember that it is important to look at a company's historical performance and compare the company ratios with its competitors and industry overall. The capitalization ratio measures the debt component of the capital structure, or capitalization of a company (i.e., the sum of long-term debt liabilities and shareholder equity) to support operations and growth. INCY has a high capitalization ratio of 490.3%. A high capitalization ratio is not necessarily bad since higher financial leverage can increase the return on a shareholder's investment. Prudent use of leverage (debt) increases the financial resources available to a company for growth and expansion.
Wright Medical Group (Nasdaq:WMGI) is trading at $20.06 per share, a significant rise of 10.2%. At 918,208 shares, the company's volume so far today is 2.9 times the average daily volume. Volume is an important indicator because it indicates how significant a price shift is. 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/book value ratio is one of the more common methods of determining whether a stock is fairly valued. WMGI's stock is trading for more than its book value with a P/B ratio of 1.66. This may be a sign that the company is overvalued. All else being equal, a stock with a low P/B value ratio is more attractive than a stock with a high ratio. SEE: Investment Valuation Ratios: Price/Book Value Ratio
After an increase of 7.8%, Gilead (Nasdaq:GILD) has reached a current price of $57.82. So far today, 16.8 million shares of the company's stock have changed hands. This is greater than yesterday's volume of 6.6 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. A simple P/E ratio can reveal the stock's real market value and show how the valuation compares to its industry group or a benchmark like the S&P 500 Index. Compared to the industry average of 11.37, GILD's P/E ratio of 16.2 is quite high. Generally speaking, the higher the P/E ratio, the higher the market expectations for a company's future performance. A high or low P/E ratio is not good or bad in and of itself, but a company trading with a high P/E ratio must continue to post strong financial performance or its stock price is likely to fall. SEE: The P/E Ratio: A Good Market-Timing Indicator
Masimo (Nasdaq:MASI) has fallen 7.4% and is currently trading at $20.65 per share. So far today, the company's volume is 603,539 shares, 1.7 times the current three-month average. The trading volume for a stock indicates the level of investor interest. Investment valuation ratios provide investors with an estimation, albeit a simplistic one, of the value of a stock. Using price/earnings ratios (P/E ratios) does not give an indication of whether or not an individual company's ratio is reasonable, a shortcoming that can be corrected by using the price/earnings to growth ratio (PEG ratio). PEG ratio for MASI is 1.24. Because of the adjustment for earnings growth rate, the PEG ratio is somewhat more useful than many formulas for comparing companies in different industries.
Bristol-Myers (NYSE:BMY) is down 7.2% to reach $33.02 per share. So far today, the company's volume is 16.5 million shares. In technical analysis, trading volume is used to determine the strength of a market indicator. Valuation ratios allow the investor to make a quick determination as to a company's investment value. The dividend yield is calculated by dividing a company's dividends per share by its stock price. BMY's dividend yield is 3.8%. It is important to remember that dividends are only one component of a stock's return and capital appreciation (or decline) must also be considered when evaluating a security. SEE: Investment Valuation Ratios: Dividend Yield
After rising 5.7%, STERIS (NYSE:STE) is currently trading at a share price of $31.70. So far today, the company's volume is 475,642 shares, 1.4 times the average daily volume. If a stock price makes a big move up or down, volume lets us know the significance of that move. A company's investment value can be 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 price/sales ratio measures a company's stock market value by its total revenues or alternatively, a company's price per share by its revenue per share. STE has a high P/S ratio of 1.3. In young companies, a high P/S ratio is a sign of sales growth that is expected to turn into earnings and cash flow. 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.
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. Tools like valuation ratios and profit margins, however, are only as useful as the context you put them in; remember to take historical data and competitor performance into account.
by
Investopedia Staff
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