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Gilead and Other Big Movers In Healthcare on October 1, 2012
It's been a good morning for the market. The Nasdaq has climbed 0.6%; the S&P 500 has increased 0.8%; and the Dow is up 1.1%. 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.
Outperforming the market overall, the Healthcare sector (XLV) is up 0.9% and its biggest movers so far today are:
Broker Summary: E-Trade Financial
Currently trading at $13.50 per share, Optimer Pharmaceuticals (Nasdaq:OPTR) has fallen 4.4%. At 228,495 shares, the company's volume so far today is consistent with its current daily average. A stock's volume conveys how excited investors are about it. Investment valuation ratios provide investors with an estimation, albeit a simplistic one, of the value of a stock. The price/book value ratio, often expressed simply as "price-to-book", provides investors a way to compare the market value, or what they are paying for each share, to a conservative measure of the value of the firm. OPTR's P/B ratio of 4.37 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. P/B value ratios are particularly useful to value investors, distressed or "vulture" investors, or any other investors purchasing beaten-down securities but are less useful to investors focused on growth stocks, purchasing IPOs, or investing in technology or other "asset-lite" companies. SEE: Investment Valuation Ratios: Price/Book Value Ratio
Luxottica Group SpA (NYSE:LUX) has increased to a share price of $36.39, a 3.2% rise. So far today, the company's volume is 92,446 shares. This is greater than yesterday's volume of 81,186 shares. Volume is used to evaluate how meaningful the price movement of a stock is. 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 debt ratio is calculated by dividing total liabilities by total assets. LUX has a debt ratio of 58.3%. As with all financial ratios, a company's debt ratio should be compared with the industry average or similar companies.
HMS (Nasdaq:HMSY) is trading at $32.44 per share, down 2.8%. So far today, the company's volume is 245,731 shares, 0.3 times the current three-month average. High volume indicates a lot of investor interest while low volume indicates the opposite. 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 measurement of how much suppliers, lenders, creditors and obligors have committed to the company versus what the shareholders have committed. HMSY has a D/E ratio of 81%. 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.
IPC The Hospitalist Company (Nasdaq:IPCM) has moved up 2.6% and is currently trading at $46.87 per share. So far today, 42,457 shares have changed hands. The trading volume for a stock indicates the level of investor interest. 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. There are generally two price/earnings ratios calculated: the first, called the trailing Price/Earnings ratio, is calculated using the previous years actual earnings; the second, called forward Price/Earnings ratio, is calculated using the next year's estimated earnings. IPCM has a P/E ratio of 24.7, high compared to the industry average of 22.42. Generally speaking, the higher the P/E ratio, the higher the market expectations for a company's future performance. To determine the P/E ratio, an investor divides the market price of the stock by the earnings-per-share (EPS) of the stock. SEE: Can Investors Trust the P/E Ratio?
Valeant Pharmaceuticals Int (NYSE:VRX) is currently trading at $56.68 per share, a 2.6% increase. So far today, the company's volume is 816,303 shares, 0.6 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. As with most ratios, comparisons of company price/earnings to growth ratios (PEG ratios) are most appropriate for similar companies. VRX's PEG ratio is 13.53. Because of the adjustment for earnings growth rate, the PEG ratio is somewhat more useful than many formulas for comparing companies in different industries.
Rising 2%, Gilead (Nasdaq:GILD) is currently trading at $67.62 per share. The company is trading at a volume of 3.2 million shares. This is on pace to reach yesterday's trading volume of 6.3 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. Investors can make use of valuation ratios to estimate whether a stock is fairly valued. The price/book value ratio is calculated by dividing the current stock price by the company's book value per share. GILD has a P/B ratio of 6.39 which shows that its share price is higher than its book value. This may be a sign that the company is overvalued. To put things in perspective, should be made among companies in the same industry rather than across industries. SEE: How Buybacks Warps The Price-To-Book Ratio
After an increase of 1.9%, Allergan (NYSE:AGN) has reached a current price of $93.31. The company's volume is currently 1.1 million shares for the day, consistent with its current three-month average. 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 allow the investor to make a quick determination as to a company's investment value. The price/sales ratio measures a company's stock market price by its revenues. AGN has a high P/S ratio of 5.0. 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. Keep in mind that all these ratios should be compared against historical numbers and industry information in order to get a more complete picture.
Outperforming the market overall, the Healthcare sector (XLV) is up 0.9% and its biggest movers so far today are:
| Company | Market Cap | Percentage Change |
| Optimer Pharmaceuticals (Nasdaq:OPTR) | $671.5 million | -4.4% |
| Luxottica Group SpA (NYSE:LUX) | $16.56 billion | +3.2% |
| HMS (Nasdaq:HMSY) | $2.88 billion | -2.8% |
| IPC The Hospitalist Company (Nasdaq:IPCM) | $760.6 million | +2.6% |
| Valeant Pharmaceuticals Int (NYSE:VRX) | $16.47 billion | +2.6% |
| Gilead (Nasdaq:GILD) | $50.18 billion | +2% |
| Allergan (NYSE:AGN) | $27.56 billion | +1.9% |
Currently trading at $13.50 per share, Optimer Pharmaceuticals (Nasdaq:OPTR) has fallen 4.4%. At 228,495 shares, the company's volume so far today is consistent with its current daily average. A stock's volume conveys how excited investors are about it. Investment valuation ratios provide investors with an estimation, albeit a simplistic one, of the value of a stock. The price/book value ratio, often expressed simply as "price-to-book", provides investors a way to compare the market value, or what they are paying for each share, to a conservative measure of the value of the firm. OPTR's P/B ratio of 4.37 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. P/B value ratios are particularly useful to value investors, distressed or "vulture" investors, or any other investors purchasing beaten-down securities but are less useful to investors focused on growth stocks, purchasing IPOs, or investing in technology or other "asset-lite" companies. SEE: Investment Valuation Ratios: Price/Book Value Ratio
Luxottica Group SpA (NYSE:LUX) has increased to a share price of $36.39, a 3.2% rise. So far today, the company's volume is 92,446 shares. This is greater than yesterday's volume of 81,186 shares. Volume is used to evaluate how meaningful the price movement of a stock is. 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 debt ratio is calculated by dividing total liabilities by total assets. LUX has a debt ratio of 58.3%. As with all financial ratios, a company's debt ratio should be compared with the industry average or similar companies.
HMS (Nasdaq:HMSY) is trading at $32.44 per share, down 2.8%. So far today, the company's volume is 245,731 shares, 0.3 times the current three-month average. High volume indicates a lot of investor interest while low volume indicates the opposite. 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 measurement of how much suppliers, lenders, creditors and obligors have committed to the company versus what the shareholders have committed. HMSY has a D/E ratio of 81%. 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.
IPC The Hospitalist Company (Nasdaq:IPCM) has moved up 2.6% and is currently trading at $46.87 per share. So far today, 42,457 shares have changed hands. The trading volume for a stock indicates the level of investor interest. 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. There are generally two price/earnings ratios calculated: the first, called the trailing Price/Earnings ratio, is calculated using the previous years actual earnings; the second, called forward Price/Earnings ratio, is calculated using the next year's estimated earnings. IPCM has a P/E ratio of 24.7, high compared to the industry average of 22.42. Generally speaking, the higher the P/E ratio, the higher the market expectations for a company's future performance. To determine the P/E ratio, an investor divides the market price of the stock by the earnings-per-share (EPS) of the stock. SEE: Can Investors Trust the P/E Ratio?
Valeant Pharmaceuticals Int (NYSE:VRX) is currently trading at $56.68 per share, a 2.6% increase. So far today, the company's volume is 816,303 shares, 0.6 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. As with most ratios, comparisons of company price/earnings to growth ratios (PEG ratios) are most appropriate for similar companies. VRX's PEG ratio is 13.53. Because of the adjustment for earnings growth rate, the PEG ratio is somewhat more useful than many formulas for comparing companies in different industries.
Rising 2%, Gilead (Nasdaq:GILD) is currently trading at $67.62 per share. The company is trading at a volume of 3.2 million shares. This is on pace to reach yesterday's trading volume of 6.3 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. Investors can make use of valuation ratios to estimate whether a stock is fairly valued. The price/book value ratio is calculated by dividing the current stock price by the company's book value per share. GILD has a P/B ratio of 6.39 which shows that its share price is higher than its book value. This may be a sign that the company is overvalued. To put things in perspective, should be made among companies in the same industry rather than across industries. SEE: How Buybacks Warps The Price-To-Book Ratio
After an increase of 1.9%, Allergan (NYSE:AGN) has reached a current price of $93.31. The company's volume is currently 1.1 million shares for the day, consistent with its current three-month average. 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 allow the investor to make a quick determination as to a company's investment value. The price/sales ratio measures a company's stock market price by its revenues. AGN has a high P/S ratio of 5.0. 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. 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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