VFC's Stock House Weekly Stock Watch, Week of 5 November
(EMAILWIRE.COM, November 5, 2012 ) New York, NY -- At the conclusion of each week, VFC's Stock House examines some news items, stocks and stories that made headlines during the previous trading week, but may also make headlines or influence trends during the upcoming week as well. First thoughts again go to those who are still pulling themselves or their loved ones together after the wrath of Hurricane Sandy.
This week, VFC's Stock House, an information and research outlet that brings ideas and opens discussions to a broad spectrum of investors, identifies multiple stocks that experienced compelling moves last week and have the potential to make headlines this week, too, as potential buys, sells or just simply as stocks to watch.
A full version of this week's report is available at: http://VFCsStockHouse.com
Finally, the politics may be winding down. Undoubtedly, Tuesday's US presidential election results will be the story of the week after an extremely long campaign season that has over-saturated the news media outlets and Facebook discussions for the better part of a year. Once the results are in on Tuesday, hopefully everyone can take a deep breath, lose some bitterness and all move forward together because - after all - we all play for the same team.
The markets will look to rebound from a sell-off on Friday that saw the DOW, Nasdaq and S&P all drop by just about a percentage point. Those results reversed an early-day bullish trend after an encouraging jobs report revealed that more jobs were created than expected during the month of October. The unemployment rate, however, jumped to 7.9% as more people started looking for work. With the presidential race reaching its culmination point, this report stood as the last real economic data release before Tuesday's election and was predicted to potentially influence the final outcome. The trends of the report, however, were not notable enough to have any real bearing on the election since each party could spin the numbers however they want, while the movement in numbers was not likely significant enough to change anyone's mind anyway. It's also a given that most have absorbed the fact that this earnings season is a weak one, so the recent sell-off should be seen as a relative non-factor to the political drama and not as a vote of confidence one way or another.
While the majority of attention will be paid to the White House, look for developing events across the pond in Europe to potentially play a factor in the global markets, too. The European economy is far from safe, especially with Greece continuously on the verge of bankruptcy as the government attempts to implement huge rounds of austerity measures in order to keep bailout money flowing. Pushed to the side for the better part of a month, now, it's still worth keeping an eye on news from Europe - especially relating to the Greek and Spanish economies.
In the meantime, there's always a few stocks and stories to keep an eye on - here's just a few of them...
Starbucks (SBUX): As the broad markets dropped on Friday, Starbucks shares jumped by over nine percent with triple the normal trading average following an enthusiastic earnings release that bucked the trend for the season. Some had tempered expectations for the Starbucks report, given the still-sluggish global economy, but the company proved that consumers still have the confidence - and free cash flow - to spend on their daily dose of quality coffee. Perhaps most-encouraging was the increase in consumer traffic to the company's stores - another strong sign of consumer confidence - and also enough to spark company officials to boost revenue forecasts for the coming year. Also resulting from the positive report was a twenty-four percent boost in the SBUX dividend rate. Moving forward, Starbucks will look to take advantage of a growing economy and revenue generated by its single-serving coffee machine to spur future growth.
In an earnings season that has proven disappointing, Starbucks emerged as one of the bigger winners and - given the revised guidance to the upside - there could be more to come.
Dendreon (DNDN): Dendreon also proved an earnings winner on Friday while the broad markets tanked as shares spiked by as high as over thirty percent on huge volume before closing the day a full sixteen percent to the upside. The catalyst for the DNDN spike may not have been so much the twenty seven percent revenue spike for Provenge over the same previous-year quarter, but more for the stability in sales from "community oncologists" and the predicted savings from cost-cutting measures implemented earlier in 21012. Dendreon officials expect the savings from such measures to reach $150 million annually, when fully implemented.
Amarin Corporation (AMRN): Looking forward, Amarin Corp is slated to report its quarterly earnings on Thursday, November 8. Investor focus on this report will not be geared towards numbers, but rather towards hints of a plan - any plan - for the commercialization of Vascepa in the treatment of very high triglycerides. Since Vascepa's approval this summer it's been widely speculated that the company would go the buyout/major partnership route, but distractions surrounding the yet-to-be-decided New Chemical Entity (NCE) designation by the FDA for Vascepa have overshadowed all else as investors grow increasingly impatient with the silence from the company. Amarin has strengthened its position, regardless, with the announcements of numerous new patents covering Vascepa over the past few months and some may read the silence as evidence that discussions with potential buyers are ongoing behind the scenes.
Spectrum Pharmaceuticals (SPPI) will be another hot earnings story to watch this week after shares have fallen significantly from their summertime highs to close Friday at under eleven dollars again. Spectrum was riding a wave of good news on the earnings front during the first half of 2012 - based mainly on increasing sales of FUSILEV in the treatment of colorectal cancer - before short interest took over and pushed the share price south. Investors riding that wave may have bailed with significant profits as expectations persist that a boost in generic manufacturing of leucovorin will soon eat away at FUSILEV profits. The leucovorin shortage could widely be viewed as the spark that ignited the FUSILEV sales rush and - although the company is taking measures (including discounting) to maintain the gained market share - many predict that the shortage will prove only temporary. Proof that the company is still generating revenue in line with expectations - including modest growth for the company's second product, Zevalin - could help shares to rebound.
Walt Disney Co. (DIS): Even with all the late-week political headlines stealing the show, Disney may have trumped them all by announcing that the company had completed a deal worth just over four billion dollars to purchase Lucasfilm and the Star Wars franchise. Not wasting any time, Disney has already announced that it is planning on bringing Episodes seven, eight and nine to market, with Episode 7 slated for 2015. Disney has already proven that it could turn big-splash acquisitions into global successes and earnings victories - as evidenced by the pick-ups of Pixar and Marvel - and although some of the Star Wars crowd may look at this deal skeptically, there should be little doubt that the hype surrounding the next trilogy could quickly make this another successful blockbuster of a deal for Disney, too.
Facebook (FB): Facebook made some noise earlier in the month following an earnings report that not only beat the street estimates, but demonstrated potential in the key mobile market, from which it was revealed the company drew fourteen percent of its revenue. Shares reached nearly twenty five bucks on more than quadruple the normal trading action following the encouraging report, but this week's news came when shares quickly fell back closer to twenty amid reports indicating that insiders were taking advantage of lock-up period expirations to sell. The expirations-related sell-offs were no surprise - such moves led to price declines earlier in the year, too - but they still attracted the attention of some high-profile headlines, nonetheless, possibly because there are still lock-up periods in effect.
Healthcare, Biotech, Pharmaceutical:
MRI Interventions (MRIC): Shares of MRI Interventions continued to hover around the two dollar mark during the storm-shortened trading week and volume has tailed off a bit of late, too. The current levels mark the lower end of a trading range established after the announcement of a stock offering pulled shares back from the five dollar level earlier this summer and may offer investors an attractive buying point, given recent developments that could have the company positioned for significant growth. As noted last month, MRIC has managed to make impressive strides in revenue growth through the 'disposable items' associated with its ClearPoint procedures. ClearPoint - and MRIC's ClearTrace, too - are MRI-enhancing systems that provide medical professionals with real-time imagery during complicated procedures on the brain and heart, respectively. The company banks revenue on sales of the system itself, but can continue generating revenue from that system through the said 'disposables.'
Synergy Pharmaceuticals (SGYP) continued its downward momentum last week, too, as the broad markets dropped, but the slide may be looked at as an opportunity for those maintaining a positive outlook regarding a late year catalyst that could prove to be the most significant milestone met to date for this still-developing company. It expected that by the end of December the company will announce results from the recently-completed Phase IIb/III Plecanatide trial in the treatment of chronic idiopathic constipation (CIC). Barely a month ago SGYP was trading for nearly five dollars in anticipation of these results - with credit for the higher prices also deserved for Ironwood Pharmaceuticals (IRWD), who received approval for Linzess in September. Linzess uses the same mechanism-of-action as Plecanatide and its approval provided additional validation to Plecanatide in the eyes of investors.
Lpath, Inc. (LPTN) on Friday announced that it had filed a shelf registration statement with SEC that will offer the company the opportunity to "offer and sell, from time to time, up to $20 million of securities consisting of its Class A common stock, warrants and units, or any combination thereof."
Also according to the release, the shelf will enhance the company's ability to better "respond to business opportunities."
Friday's news is the latest chapter of an up-and-down year that began with a temporary trial halt - that was unrelated to the efficacy or safety of leading product candidate iSONEP in the treatment of Wet AMD - and culminated last month in a reverse stock split after the iSONEP trial had been re-started.
Explosive Trace Detection (ETD) / Global Defense:
Implant Sciences (IMSC): It's crunch time for Implant Sciences in regards to the ongoing validation by the Transportation Security Laboratory's (TSL) of the company's QS-B220 explosives and narcotics trace detector which is being positioned for potential use in air cargo screening - especially given the key December 3rd deadline imposed by the TSA stating that all inbound-US air cargo on passenger airliners will be screened for explosive traces - but business continues to move forward on the international front, too, as indicated by a Friday announcement of a further push into Nigeria. According to the release, Implant has sold three more QS-H150 handheld explosives trace detectors to a corporate customer in Nigeria, marking the fifth order to that country in the last six months.
Technology, Products, Services:
Sirius XM Radio Inc. (SIRI) traded higher by over three percent on Friday - on a broad-market down day - and renewed investor enthusiasm that the stock would soon breach the three dollar barrier. The company reported earnings last week and there were few surprises, given the enthusiastic prequel by CEO Mel Karmazin during Liberty Media's (LMCA) analyst meeting earlier in the month, although the company did report better-than-expected revenue growth. Earnings were seen as off, but the company continues to pay down and retire existing debt with its free cash pile. SiriusXM also predicts 1.8 million total net subscriber additions for the full-year and maintains an enthusiastic outlook as Liberty Media approach de-facto control of the company.
Roundup: With a full slate scheduled - including US elections, earnings reports and key economic news from overseas - this will be anything but a dull week. Market volatility should be considered a near-certainty as attention again shifts to Europe after the US elections are over. Trading opportunities could be a-plenty, but so can buying opportunities for those that prefer to take the buy and hold route. And any dip in DIS could turn out to be money - it's likely that the $4 billion investment in the Star Wars series will be paid back well before Episode 9 makes its rounds.
And here's to the would-be marathoners who decided - once the race was cancelled - to make the trip to Staten Island and help clean up. Closing thoughts again go to all of those still recovering and reeling from tragedy - not just here, but in all the world's flashpoints, too many of which go unnoticed.
Disclosure: Long DNDN, AMRN, IMSC, CPST, SGYP.
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About VFCsStockHouse.com: VFC's Stock House is an information and research outlet that brings new ideas to the table and opens discussions for a broad spectrum of investors, with a strong focus on - but not limited to - biotech stocks, biopharma stocks, and pharmaceutical and healthcare stocks. VFC's Stock House provides individual company profiles, write-ups and reports as well as giving general insights into broader-market news through various 'Stock Watch' lists. At the conclusion of most weeks, VFC's Stock House issues a "Weekly Stock Watch" that examines news items, stocks and stories that made headlines during the previous trading week, but may also make headlines or influence trends during the upcoming week as well. The information contained within the pages of VFCs Stock House are not intended to be taken as advice, but as a starting point where investors can follow up with their own DD and devise their own entry and exit strategies.
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