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Tale of the Tape

Zacks Equity Research

What Makes RedHill Biopharma (RDHL) a Strong Sell?
November 23, 2016

RDHL AAAP

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 RedHill Biopharma Ltd. (RDHL - Free 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 #4 (Sell) further confirms weakness in RDHL.

A key reason for this move has been the negative trend in earnings estimate revisions. For the full year, we have seen 3 estimates moving down in the past 30 days, compared with no upward revisions. This trend has caused the consensus estimate to trend lower, going from a loss of $2.11 a share a month ago to its current level of a loss of $2.37.

Also, for the current quarter, RedHill Biopharma has seen 3 downward estimate revisions versus no revision in the opposite direction, dragging the consensus estimate down to a loss of 69 cents a share from a loss of 55 cents over the past 30 days.  

The stock also has seen some pretty dismal trading lately, as the share price has dropped 16.6% in the past month.

REDHILL BIO-ADR Price and Consensus

REDHILL BIO-ADR Price and Consensus | REDHILL BIO-ADR Quote

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 - Drugs industry, you may instead consider a better-ranked stock - Advanced Accelerator Applications S.A. (AAAP - Free Report) . The stock currently holds a Zacks Rank #1 (Strong Buy) and may be a better selection at this time. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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