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What Makes Genomic Health (GHDX) a Strong Sell?
February 13, 2014

GHDX ALXN BIIB CBM

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Similar to wise buying decisions, exiting certain underperformers at the right time helps maximize portfolio returns. Selling off losers can be difficult, but if both the share price and estimates are falling, it could be time to get rid of the security before more losses hit your portfolio.

One such stock that you may want to consider dropping is Genomic Health Inc. (GHDX - Analyst Report), which has witnessed a significant price decline in the past four weeks, and it has seen negative earnings estimate revisions for the current quarter and the current year. A Zacks Rank #5 (Strong Sell) further confirms weakness in GHDX.

A key reason for this move has been the negative trend in earnings estimate revisions. For the full year, we have seen 9 estimates moving down in the past 30 days, compared to no upward revision. This trend has caused the consensus estimate to trend lower, going from earnings of 11 cents a share a month ago to its current level of loss of 84 cents.

Also, for the current quarter, Genomic Health has seen 5 downward estimate revisions versus no revision in the opposite direction, dragging the consensus estimate down to loss of 19 cents a share from break-even level over the past 30 days.   

The stock has also seen some pretty dismal trading lately, as the share price has dropped 11.9% in the past month.

So it may not be a good decision to keep this stock in your portfolio anymore, at least if you don’t have a long time horizon to wait.

If you are still interested in the Medical industry, you may instead consider some better-ranked stocks including Alexion Pharmaceuticals, Inc. (ALXN - Analyst Report), Biogen Idec Inc. (BIIB - Analyst Report), and Cambrex Corporation (CBM - Snapshot Report). All these stocks hold a Zacks Rank #1 (Strong Buy). With favorable Zacks Ranks, these stocks may be better selections at this time.

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