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Tickers in this Article: VVUS, MACK, ISRG, ONXX, ALGN, ATRS, DGX
The morning has been bad for the market. The Nasdaq is down 0.7%; the S&P 500 has slipped 0.7%; and the Dow has decreased 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 down 1.1%, underperforming the market overall. The current biggest movers in the sector are:
CompanyMarket CapPercentage Change
VIVUS, Inc. (Nasdaq:VVUS)$2.57 billion-14.7%
Merrimack Pharmaceuticals Inc (Nasdaq:MACK)$676.4 million+9.7%
Intuitive Surgical (Nasdaq:ISRG)$21.61 billion-8.4%
Onyx Pharmaceuticals, Inc. (Nasdaq:ONXX)$4.4 billion+5.2%
Align Technology, Inc. (Nasdaq:ALGN)$2.55 billion+4.3%
Antares Pharma Inc (Nasdaq:ATRS)$531.8 million+4.1%
Quest Diagnostics (NYSE:DGX)$9.68 billion-3.6%
Broker Summary: Fidelity Online Brokerage

Taking a 14.7% hit, VIVUS (Nasdaq:VVUS) is currently trading at $21.98 per share. With 11.1 million shares changing hands so far today, the company's volume is one times its average over the past three months. When a stock price moves up or down, watching the volume is a good way of identifying how significant that shift is. Investment valuation ratios can be very useful in estimating whether a stock price is too high, reasonable or a bargain investment opportunity. The price/book value ratio is especially important for value investors as it can provide an indication of the true value of a company's assets at a time when its business model may be failing. VVUS has a P/B ratio of 6.72 which shows that its share price is higher 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: How Buybacks Warps The Price-To-Book Ratio

Merrimack Pharmaceuticals (Nasdaq:MACK) is at $7.96 per share after an increase of 9.7%. This morning, the company is trading a volume of 273,960 shares. In technical analysis, trading volume is used to determine the strength of a market indicator. Investment valuation ratios provide investors with an estimation, albeit a simplistic one, of the value of a stock. The price/sales ratio is used for spotting recovery situations or for double-checking that a company's growth has not become overvalued. MACK has a high P/S ratio of 1.89. 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.

Slipping 8.4%, Intuitive Surgical (Nasdaq:ISRG) is currently trading at $498.68 per share. This morning, 816,564 shares have been traded, whereas yesterday, volume was only 500,478 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. When estimating the value of a particular investment, valuation ratios provide a good basis for assessing the value of an individual stock. The debt ratio gives users a quick measure of the amount of debt that the company has on its balance sheets compared to its assets. The debt ratio for ISRG is a low 12.2%. In other words, the company is less sensitive to changes in business or interest rates since less of its cash flow is dedicated to paying off loan expenses. As with all financial ratios, a company's debt ratio should be compared with the industry average or similar companies.

Onyx Pharmaceuticals (Nasdaq:ONXX) is currently trading at $71.95 per share, a 5.2% increase. So far this morning, 1.7 million shares have changed hands. This is 1.5 times its average daily volume. Volume is an important indicator because it indicates how significant a price shift is. Understanding investment valuation ratios allows an investor to assess the true value of an individual stock. 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. ONXX has a debt-equity ratio of 21%, 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.

Align Technology (Nasdaq:ALGN) has moved up 4.3% and is currently trading at $33.07 per share. The company's volume is currently 2.1 million shares for the day, 1.5 times its current three-month average. If a stock price makes a big move up or down, volume lets us know the significance of that move. 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. As with most ratios, comparisons of company price/earnings to growth ratios (PEG ratios) are most appropriate for similar companies. ALGN has a PEG ratio of 1.93. While P/E ratios are important indicators of market value, a high P/E in and of itself is not bad because it may indicate a company whose earnings are growing very rapidly, so many investors look at the PEG ratio in order to get an idea of whether or not a particular P/E ratio is justified by underlying earnings growth.

After an increase of 4.1%, Antares Pharma (Nasdaq:ATRS) has reached a current price of $5.31. So far today, the company's volume is 1.1 million shares. Volume is used to evaluate how meaningful the price movement of a stock is. A wide array of ratios can be used by investors to estimate the attractiveness of a potential or existing investment and get an idea of its valuation. If the price/book value ratio of a stock is high, it may indicate that the stock is expensive, while a lower ratio may indicate that the stock is a bargain. The P/B ratio for ATRS is 17.13, indicating that the stock is trading for more than its book value. This may be a sign that the company is overvalued. Users need to be careful when applying this ratio though, as it is more useful for industrial companies that have a lot of tangible assets than it is for technology or consumer product companies that may not have much in the way of hard assets. SEE: Using The Price-To-Book Ratio To Evaluate Companies

Quest Diagnostics (NYSE:DGX) has fallen 3.6% and is currently trading at $58.86 per share. At 675,327 shares, the company's volume so far today is lighter than yesterday's volume of 2.5 million shares. Volume indicates the level of interest that investors have in a company at its current price. 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. A company's price/earnings ratio (P/E ratio) provides a measure of how expensive or cheap a stock is. Compared to the industry average of 12.67, DGX's P/E ratio of 14.8 is quite high. A company with a high P/E ratio will eventually have to live up to the high rating by substantially increasing its earnings, or the price will need to drop. 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: Profit With The Power Of Price-To-Earnings

The Bottom Line The nature of the market is such that stocks will have good days and bad days. Daily stock performance should be weighed against historical performance and put in context of the market overall. However, these fundamental metrics must be analyzed with historic data, industry information in addition to firm specific financial statements.

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