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Tickers in this Article: IMGN, MDVN, BKD, HCA, PCYC, HMSY, REGN
After the morning's trading, the Nasdaq has increased 0.4%, the S&P 500 has risen 0.3% and the Dow has moved little. 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 moved up 0.1% overall, and these are the biggest movers in the sector so far:
CompanyMarket CapPercentage Change
ImmunoGen (Nasdaq:IMGN)$1.33 billion-4.6%
Medivation (Nasdaq:MDVN)$3.93 billion+3.9%
Brookdale Senior Living (NYSE:BKD)$2.7 billion+3.5%
HCA (NYSE:HCA)$14.09 billion+3.4%
Pharmacyclics (Nasdaq:PCYC)$4.25 billion+2.8%
HMS (Nasdaq:HMSY)$2.74 billion+2.3%
Regeneron Pharmaceuticals (Nasdaq:REGN)$13.73 billion+2.1%
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ImmunoGen (Nasdaq:IMGN) is currently trading at a share price of $15.07, a 4.6% decline. So far this morning, 509,923 shares have changed hands. This is 0.7 times its average daily volume. Price change alone is not enough to know how a stock is doing. Volume is an important secondary indicator used to confirm trends suggested by price movement. 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 price/book value ratio provides a way of evaluating whether a stock is relatively cheap or expensive. IMGN's P/B ratio of 15.07 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. 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: Investment Valuation Ratios: Price/Book Value Ratio

Medivation (Nasdaq:MDVN) has increased to a share price of $55.50, a 3.9% rise. The company's volume is currently 589,447 shares for the day, 0.7 times the current three-month average. A stock's volume conveys how excited investors are about it. 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 MDVN is a high 30.57. In young companies, a high P/S ratio is a sign of sales growth that is expected to turn into earnings and cash flow. It is important to compare P/S ratios for companies in the same industry, as ratios can vary quite widely for companies in different industries.

Brookdale Senior Living (NYSE:BKD) has risen 3.5% to hit a current price of $22.85 per share. The company's volume for the day so far is 1.1 million shares. High volume indicates a lot of investor interest while low volume indicates the opposite. It is important for an investor to estimate the value of any potential or existing investment; valuation ratios make this easier. The debt ratio is calculated by dividing total liabilities by total assets. BKD has a debt ratio of 77.6%, which is on the high side. 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.

Increasing 3.4%, HCA (NYSE:HCA) is trading at $33.07 per share. So far today, 1.1 million shares have changed hands, consistent with the volume from yesterday which is likely to result in less activity than yesterday's volume of 2.3 million shares. As a stock moves up or down, it is important to pay attention to the trading volume. This indicates the level of interest: the higher the volume, the more the interest. Investment valuation ratios can be very useful in estimating whether a stock price is too high, reasonable or a bargain investment opportunity. One of the most important estimates of stock market valuation is the price/earnings ratio (P/E ratio). Relative to the industry P/E ratio of 15.15, HCA's 5.2 is low. A low P/E might arise due to substantial inherent risk of the firm and its operations, poor return on equity, or improper valuation of the market. High P/E stocks could be "growth" stocks, while low PE stocks may be "value" stocks. SEE: Investment Valuation Ratios: Price/Earnings Ratio

Pharmacyclics (Nasdaq:PCYC) has risen 2.8% and is currently trading at $62.85 per share. The company's volume for the morning is 127,271 shares. This is 0.1 times the average daily volume. 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. Investment valuation ratios provide investors with an estimation, albeit a simplistic one, of the value of a stock. 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 PCYC is 33.08, indicating that the stock is trading for more than its book value. 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: How Buybacks Warps The Price-To-Book Ratio

HMS (Nasdaq:HMSY) has moved up 2.3% and is currently trading at $32.46 per share. At 188,556 shares, the company's volume so far today is 0.3 times its current three-month average. Volume is also used as a secondary indicator to help confirm what the price movement is suggesting. Understanding investment valuation ratios allows an investor to assess the true value of an individual stock. While measuring a price/earnings ratio (P/E ratio) is a popular valuation technique, the measure cannot be calculated for companies without earnings, so some investors analyze the price/sales ratio. HMSY's P/S ratio of 6.83 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.

Regeneron Pharmaceuticals (Nasdaq:REGN) is up 2.1% to reach a current price of $145.92 per share. So far today, 188,386 shares have changed hands. 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 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 debt ratio shows the proportion of assets that a company is financing through debt. The debt ratio for REGN is 59.2%. 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.

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. Keep in mind that all these ratios should be compared against historical numbers and industry information in order to get a more complete picture.

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