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Zimmer and More Big Movers in Healthcare on September 7, 2012
The Nasdaq is trading down 0.2%, the S&P 500 has risen 0.3% and the Dow has remained steady after the morning's trading. 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 0.2% overall, and these are the biggest movers in the sector so far:
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Cooper Companies (NYSE:COO) is currently trading at $93.45 per share, a 8.6% increase. So far today, the company's volume is 1.2 million shares. Yesterday, volume was only 581,409 shares. 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. Investment valuation ratios can be very useful in estimating whether a stock price is too high, reasonable or a bargain investment opportunity. When used consistently and uniformly, the price/earnings to growth (PEG) ratio is an essential tool that adds dimension to the price/earnings ratio, allows comparisons across diverse industries and is always on the lookout for value. PEG ratio for COO is consistent with the industry average at 1.43. 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.
ABIOMED (Nasdaq:ABMD) has decreased to $21.44 per share, a 7.9% fall. The company's volume for the day so far is 504,406 shares, 1.4 times its average over the past three months. Volume is an important indicator because it indicates how significant a price shift is. 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 P/E ratio has been used for ages by analysts and still remains one of the most relevant pieces of stock valuation. Compared to the industry average of 16.92, ABMD's P/E ratio of 97.0 is quite high. Usually, if a stock has a high P/E ratio, it indicates that the market expects the company to grow earnings quickly in the future. 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: Can Investors Trust the P/E Ratio?
Endologix (Nasdaq:ELGX) has risen 7.1% and is currently trading at $12.74 per share. So far today, the company's volume is 195,508 shares. Volume is used to evaluate how meaningful the price movement of a stock is. Investors can use valuation ratios as tools to estimate what kind of deal a particular investment is. 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. ELGX's P/B ratio of 7.86 shows that its share price is higher than its book value. This high share price relative to asset value is likely to indicate that the company has been earning a very high return on its assets. 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: Investment Valuation Ratios: Price/Book Value Ratio
Slipping 3.9%, Seattle Genetics (Nasdaq:SGEN) is currently trading at $28.52 per share. The company's volume is currently 382,366 shares for the day, consistent with its current daily average. When a stock price moves up or down, watching the volume is a good way of identifying how significant that shift is. It is important for an investor to estimate the value of any potential or existing investment; valuation ratios make this easier. In a nutshell, the price/sales ratio shows how much Wall Street values every dollar of the company's sales. The P/S ratio for SGEN is 18.01, which is relatively high. 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.
Increasing 3.3%, Questcor Pharmaceuticals (Nasdaq:QCOR) is trading at $51.94 per share. So far today, 1.6 million shares of the company's stock have changed hands. The trading volume for a stock indicates the level of investor interest. 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 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 QCOR is a low 35.1%. 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. 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.
Zimmer (NYSE:ZMH) is at $65.84 per share after an increase of 2.8%. So far today, the company's volume is 931,933 shares, one times its current three-month average. 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. Understanding investment valuation ratios allows an investor to assess the true value of an individual stock. The debt-equity (D/E) ratio compares the total liabilities for a company to its total shareholder equity. ZMH's debt-equity ratio of 42% is on the low end. A low D/E ratio may be a sign that the company is not taking advantage of leverage to increase its profits. The D/E ratio percentage provides a much more dramatic perspective on a company's leverage position than the debt ratio percentage.
CareFusion (NYSE:CFN) is up 2.5% to reach a current price of $27.44 per share. The company's volume for the day so far is 932,544 shares. 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 price/earnings to growth (PEG) ratio is calculated by dividing the price/earnings ratio by growth in earnings-per-share; the lower the PEG ratio, the more reasonably valued the security. CFN has a PEG ratio of 1.91. 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. 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) has moved up 0.2% overall, and these are the biggest movers in the sector so far:
| Company | Market Cap | Percentage Change |
| Cooper Companies (NYSE:COO) | $4.14 billion | +8.6% |
| ABIOMED (Nasdaq:ABMD) | $920.6 million | -7.9% |
| Endologix (Nasdaq:ELGX) | $730.1 million | +7.1% |
| Seattle Genetics (Nasdaq:SGEN) | $3.51 billion | -3.9% |
| Questcor Pharmaceuticals (Nasdaq:QCOR) | $3 billion | +3.3% |
| Zimmer (NYSE:ZMH) | $11.19 billion | +2.8% |
| CareFusion (NYSE:CFN) | $5.94 billion | +2.5% |
Cooper Companies (NYSE:COO) is currently trading at $93.45 per share, a 8.6% increase. So far today, the company's volume is 1.2 million shares. Yesterday, volume was only 581,409 shares. 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. Investment valuation ratios can be very useful in estimating whether a stock price is too high, reasonable or a bargain investment opportunity. When used consistently and uniformly, the price/earnings to growth (PEG) ratio is an essential tool that adds dimension to the price/earnings ratio, allows comparisons across diverse industries and is always on the lookout for value. PEG ratio for COO is consistent with the industry average at 1.43. 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.
ABIOMED (Nasdaq:ABMD) has decreased to $21.44 per share, a 7.9% fall. The company's volume for the day so far is 504,406 shares, 1.4 times its average over the past three months. Volume is an important indicator because it indicates how significant a price shift is. 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 P/E ratio has been used for ages by analysts and still remains one of the most relevant pieces of stock valuation. Compared to the industry average of 16.92, ABMD's P/E ratio of 97.0 is quite high. Usually, if a stock has a high P/E ratio, it indicates that the market expects the company to grow earnings quickly in the future. 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: Can Investors Trust the P/E Ratio?
Endologix (Nasdaq:ELGX) has risen 7.1% and is currently trading at $12.74 per share. So far today, the company's volume is 195,508 shares. Volume is used to evaluate how meaningful the price movement of a stock is. Investors can use valuation ratios as tools to estimate what kind of deal a particular investment is. 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. ELGX's P/B ratio of 7.86 shows that its share price is higher than its book value. This high share price relative to asset value is likely to indicate that the company has been earning a very high return on its assets. 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: Investment Valuation Ratios: Price/Book Value Ratio
Slipping 3.9%, Seattle Genetics (Nasdaq:SGEN) is currently trading at $28.52 per share. The company's volume is currently 382,366 shares for the day, consistent with its current daily average. When a stock price moves up or down, watching the volume is a good way of identifying how significant that shift is. It is important for an investor to estimate the value of any potential or existing investment; valuation ratios make this easier. In a nutshell, the price/sales ratio shows how much Wall Street values every dollar of the company's sales. The P/S ratio for SGEN is 18.01, which is relatively high. 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.
Increasing 3.3%, Questcor Pharmaceuticals (Nasdaq:QCOR) is trading at $51.94 per share. So far today, 1.6 million shares of the company's stock have changed hands. The trading volume for a stock indicates the level of investor interest. 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 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 QCOR is a low 35.1%. 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. 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.
Zimmer (NYSE:ZMH) is at $65.84 per share after an increase of 2.8%. So far today, the company's volume is 931,933 shares, one times its current three-month average. 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. Understanding investment valuation ratios allows an investor to assess the true value of an individual stock. The debt-equity (D/E) ratio compares the total liabilities for a company to its total shareholder equity. ZMH's debt-equity ratio of 42% is on the low end. A low D/E ratio may be a sign that the company is not taking advantage of leverage to increase its profits. The D/E ratio percentage provides a much more dramatic perspective on a company's leverage position than the debt ratio percentage.
CareFusion (NYSE:CFN) is up 2.5% to reach a current price of $27.44 per share. The company's volume for the day so far is 932,544 shares. 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 price/earnings to growth (PEG) ratio is calculated by dividing the price/earnings ratio by growth in earnings-per-share; the lower the PEG ratio, the more reasonably valued the security. CFN has a PEG ratio of 1.91. 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. 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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