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Healthcare Stocks, Including Taro Pharmaceutical, Making Big Moves on September 19, 2012
On a good day for the market, the Nasdaq has increased 0.1%, the S&P 500 is trading up 0.2% and the Dow is up 0.3%. 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 up 0.3%, outperforming the market overall. The biggest movers in the sector so far are:
Forex Broker Summary: UFXMarkets
Achillion Pharmaceuticals (Nasdaq:ACHN) has soared 12.1% to reach a current price of $9.08 per share. So far today, the company's volume is 4.8 million shares, 4.1 times its average over the past three months. Volume indicates the level of interest that investors have in a company at its current price. Investors can make use of valuation ratios to estimate whether a stock is fairly valued. 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. ACHN's debt-equity ratio of 2% is on the low end. Companies with low D/E ratios are more attractive to investors because they are better able to protect their business interests in times of decline. The D/E ratio percentage provides a much more dramatic perspective on a company's leverage position than the debt ratio percentage.
After a precipitous drop of 11.7%, Idenix Pharmaceuticals (Nasdaq:IDIX) is now trading at a share price of $4.98. This morning, the company is trading a volume of 2.4 million shares. Volume is also used as a secondary indicator to help confirm what the price movement is suggesting. 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 price/book value ratio is one of the more common methods of determining whether a stock is fairly valued. IDIX has a P/B ratio of 13.83 which shows that its share price is higher than its book value. This may be a sign that the company is overvalued. P/B has its shortcomings but is still widely used as a valuation metric, more relevant for use by investors looking at capital-intensive or finance-related businesses, such as banks; book value does not carry much meaning for service-based firms with few tangible assets. SEE: How Buybacks Warps The Price-To-Book Ratio
Clovis Oncology (Nasdaq:CLVS) has risen 5.5% and is currently trading at $22.26 per share. At 136,541 shares, the company's volume so far today is 0.7 times the current daily average. 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. Looking at a company's valuation ratios is a good way of getting a basic idea as to its value as an investment. 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. CLVS has a debt ratio of 5.7%, which is fairly low. This indicates that the company engages in conservative financing with opportunities to borrow in the future at no significant risk. 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.
Spectrum Pharmaceuticals (Nasdaq:SPPI) is down 3.9% to reach $12.72 per share. The company is trading at a volume of 1.1 million shares. This is on pace to reach yesterday's trading volume of 2.3 million shares. When a stock price moves up or down, watching the volume is a good way of identifying how significant that shift is. In making a decision about a potential or existing investment, valuation ratios are useful as a basis for seeing whether the stock price is too high, reasonable, or a bargain. The P/E ratio has been used for ages by analysts and still remains one of the most relevant pieces of stock valuation. SPPI has a P/E ratio of 8.9. A high P/E ratio indicates a stock that is expensive, while a low P/E ratio indicates a stock that is cheap. SEE: Understanding The P/E Ratio
Slipping 3.7%, Alnylam Pharmaceuticals (Nasdaq:ALNY) is currently trading at $19.93 per share. At 196,778 shares, the company's volume so far today is in keeping with the average volume over the past three months. 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. When estimating the value of a particular investment, valuation ratios provide a good basis for assessing the value of an individual stock. One of the favorite tools of many value investors is analyzing price/book value ratios, as it provides a measure of the underlying value of a company's assets as compared to the valuation of its equity. The P/B ratio for ALNY is 5.54, indicating that the stock is trading for more 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
After rising 3.1%, Taro Pharmaceutical (NYSE:TARO) is currently trading at a share price of $45.32. So far today, 23,943 shares have changed hands. 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 shows the proportion of assets that a company is financing through debt. TARO has a low debt ratio of 22.3%. 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.
Impax Laboratories (Nasdaq:IPXL) is currently trading at $25.61 per share, a 3.1% increase. So far today, the company's volume is 474,714 shares, 0.8 times the average daily volume. Volume is an important indicator because it indicates how significant a price shift 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. The price/earnings to growth (PEG) ratio divides a company's P/E ratio by its growth rate of earnings-per-share. IPXL's PEG ratio is 1.35. Because of the adjustment for earnings growth rate, the PEG ratio is somewhat more useful than many formulas for comparing companies in different industries.
The Bottom Line No matter the economic climate, Wall Street will always have stocks that make major moves each week. Paying close attention to the previous ratios will help you identify key times to adjust your strategy. Keep in mind that all these ratios should be compared against historical numbers and industry information in order to get a more complete picture.
The Healthcare sector (XLV) is up 0.3%, outperforming the market overall. The biggest movers in the sector so far are:
| Company | Market Cap | Percentage Change |
| Achillion Pharmaceuticals (Nasdaq:ACHN) | $639.5 million | +12.1% |
| Idenix Pharmaceuticals (Nasdaq:IDIX) | $736.4 million | -11.7% |
| Clovis Oncology (Nasdaq:CLVS) | $551.5 million | +5.5% |
| Spectrum Pharmaceuticals (Nasdaq:SPPI) | $797 million | -3.9% |
| Alnylam Pharmaceuticals (Nasdaq:ALNY) | $1.08 billion | -3.7% |
| Taro Pharmaceutical (NYSE:TARO) | $1.95 billion | +3.1% |
| Impax Laboratories (Nasdaq:IPXL) | $1.67 billion | +3.1% |
Achillion Pharmaceuticals (Nasdaq:ACHN) has soared 12.1% to reach a current price of $9.08 per share. So far today, the company's volume is 4.8 million shares, 4.1 times its average over the past three months. Volume indicates the level of interest that investors have in a company at its current price. Investors can make use of valuation ratios to estimate whether a stock is fairly valued. 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. ACHN's debt-equity ratio of 2% is on the low end. Companies with low D/E ratios are more attractive to investors because they are better able to protect their business interests in times of decline. The D/E ratio percentage provides a much more dramatic perspective on a company's leverage position than the debt ratio percentage.
After a precipitous drop of 11.7%, Idenix Pharmaceuticals (Nasdaq:IDIX) is now trading at a share price of $4.98. This morning, the company is trading a volume of 2.4 million shares. Volume is also used as a secondary indicator to help confirm what the price movement is suggesting. 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 price/book value ratio is one of the more common methods of determining whether a stock is fairly valued. IDIX has a P/B ratio of 13.83 which shows that its share price is higher than its book value. This may be a sign that the company is overvalued. P/B has its shortcomings but is still widely used as a valuation metric, more relevant for use by investors looking at capital-intensive or finance-related businesses, such as banks; book value does not carry much meaning for service-based firms with few tangible assets. SEE: How Buybacks Warps The Price-To-Book Ratio
Clovis Oncology (Nasdaq:CLVS) has risen 5.5% and is currently trading at $22.26 per share. At 136,541 shares, the company's volume so far today is 0.7 times the current daily average. 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. Looking at a company's valuation ratios is a good way of getting a basic idea as to its value as an investment. 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. CLVS has a debt ratio of 5.7%, which is fairly low. This indicates that the company engages in conservative financing with opportunities to borrow in the future at no significant risk. 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.
Spectrum Pharmaceuticals (Nasdaq:SPPI) is down 3.9% to reach $12.72 per share. The company is trading at a volume of 1.1 million shares. This is on pace to reach yesterday's trading volume of 2.3 million shares. When a stock price moves up or down, watching the volume is a good way of identifying how significant that shift is. In making a decision about a potential or existing investment, valuation ratios are useful as a basis for seeing whether the stock price is too high, reasonable, or a bargain. The P/E ratio has been used for ages by analysts and still remains one of the most relevant pieces of stock valuation. SPPI has a P/E ratio of 8.9. A high P/E ratio indicates a stock that is expensive, while a low P/E ratio indicates a stock that is cheap. SEE: Understanding The P/E Ratio
Slipping 3.7%, Alnylam Pharmaceuticals (Nasdaq:ALNY) is currently trading at $19.93 per share. At 196,778 shares, the company's volume so far today is in keeping with the average volume over the past three months. 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. When estimating the value of a particular investment, valuation ratios provide a good basis for assessing the value of an individual stock. One of the favorite tools of many value investors is analyzing price/book value ratios, as it provides a measure of the underlying value of a company's assets as compared to the valuation of its equity. The P/B ratio for ALNY is 5.54, indicating that the stock is trading for more 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
After rising 3.1%, Taro Pharmaceutical (NYSE:TARO) is currently trading at a share price of $45.32. So far today, 23,943 shares have changed hands. 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 shows the proportion of assets that a company is financing through debt. TARO has a low debt ratio of 22.3%. 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.
Impax Laboratories (Nasdaq:IPXL) is currently trading at $25.61 per share, a 3.1% increase. So far today, the company's volume is 474,714 shares, 0.8 times the average daily volume. Volume is an important indicator because it indicates how significant a price shift 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. The price/earnings to growth (PEG) ratio divides a company's P/E ratio by its growth rate of earnings-per-share. IPXL's PEG ratio is 1.35. Because of the adjustment for earnings growth rate, the PEG ratio is somewhat more useful than many formulas for comparing companies in different industries.
The Bottom Line No matter the economic climate, Wall Street will always have stocks that make major moves each week. Paying close attention to the previous ratios will help you identify key times to adjust your strategy. 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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