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Tale of the Tape

Zacks Equity Research

Weakness Seen in Auxiliam Pharmaceutical (AUXL) Estimates: Should You Stay Away?
May 08, 2014

Trades from $3
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 Auxiliam Pharmaceutical Inc. , 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 AUXL.

A key reason for this move has been the negative trend in earnings estimate revisions. For the full year, we have seen 1 estimate moving down in the past 30 days, compared with no upward revision. This trend has caused the consensus estimate to trend lower, going from 60 cents a share a month ago to its current level of 32 cents.

Also, for the current quarter, Auxiliam has seen 1 downward estimate revision versus no revision in the opposite direction, dragging the consensus estimate down to 2 cents a share from 10 cents over the past 30 days.   

The stock also has seen some pretty dismal trading lately, as the share price has dropped 21.86% 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 Med-Drugs industry, you may instead consider some better-ranked stocks including include Enanta Pharmaceuticals, Inc. (ENTA), Spectrum Pharmaceuticals, Inc. (SPPI) and Ariad Pharmaceuticals Inc. (ARIA). Among these stocks Enanta and Spectrum hold a Zacks Rank #1(Strong Buy) and Ariad holds a Zacks Rank #2 (Buy). With favorable Zacks Ranks, these stocks may be better selections at this time.

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