VFC's Stock House Weekly Stock Watch, Week of 29 October
(EMAILWIRE.COM, October 29, 2012 ) New York, NY -- The market demise that began with Google's (GOOG) surprisingly weak earnings report about ten days ago - which was then followed by additional salvos of dismal earnings from other industry leaders in multiple sectors - continued last week with an early-week drop that saw the DOW sitting at just above the 13,000 mark by the close on Friday.
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
Few signs of economic strength and improving earnings were offered to help keep enthusiasm afloat and pessimism at bay, although the two percent growth in the US GDP reported last week beat most analyst estimates and has warded off any immediate concerns of a return to recessionary times. The news was played down by many pundits, however, and the markets failed to react with any conviction as earnings reports continued to disappoint.
Moving into the new trading week, it's highly likely that politics - and even weather - will trump any news that the earnings season can produce. The last full week of the US Presidential election campaign will intensify an already volatile political climate just as the 'Perfect Storm' comes barrelling down on the east coast. Once the storm passes and the focus is again on politics and economic data, expect Friday's jobs report to create a wave of buzz that could hold presidential implications. A report that is stronger than expected can give the incubent US President the boost he needs to put a close race over the top, while a notable disappointment can potentially sway those that may still be on the fence to cast their vote in favor of the challenger.
If the race is truly as tight as is being reported, this is one of those rare, key weeks where the smallest of details could potentially shape the course of a nation's history - that's what it's all about.
While the east coast hunkers down in expectations of Sandy and the political heat intensifies in the battleground states, here's a few stocks and stories to keep an eye on during the upcoming trading week...
Earnings: It's been no secret that this earnings season was expected to be a weak one, even long before the first reports started rolling in, but a few high-profile surprises to the downside - such as Google and McDonald's (MCD) - sent the shock waves in motion and even the most optimistic of investors decided that there would not be enough 'beat the street' reports to justify any potential rebounds. The last real hope may have come last week when the Apple (AAPL) juggernaut reported, but even Apple's numbers - although still demonstrating a stellar growth rate - came in under estimates and shares dropped to below the six hundred dollar mark for the first time in months.
Of note this week, Starbucks (SBUX) is set to announce results on Thursday. Given the company's modest earnings miss during the previous quarter, and the fact that the current earnings season has pretty much hit everyone and anyone hard, expectations may be tamed for SBUX, too, as shares have dropped by about five bucks from their late-September-early-October highs. Signs of strength, however, may emerge from the company's 'K-Cup' single-serve coffee offering which has consistently eaten away at the market share of competitors, given the name and quality provided by Starbucks that resonates with consumers.
Overall, a hit or miss by Starbucks should not influence broad market trading trends, but it could offer insight into how much free cash consumers are willing to spend on the 'luxuries' these days - although some would argue (including this guy) that a decent cup of coffee or two to get through the morning is a necessity, not a luxury.
It hasn't been all bad news this quarter, though. Sirius XM Radio Inc. (SIRI) CEO Mel Karmazin, for instance, provided early-month guidance at Liberty Media's (LMCA) analyst meeting a few weeks ago that it would up its year-end subscriber guidance thanks to an auto-industry rebound over the past few months. SIRI shares had been gunning for three bucks for weeks already, but the positive guidance gave the stock the boost it needed to approach that mark, falling just short at $2.97.
Sirius is slated to report earnings this coming Tuesday and with investors already riding high on the encouraging tone at the Liberty meeting, more attention may now be paid on the activities surrounding last week's announcement that Karmazin will step down come February 1st. Karmazin has presided over Sirius since 2006, secured the merger with XM and worked the deal with Liberty's John Malone to stave off bankruptcy in 2009 when SIRI shares traded for a mere nickel. Malone and Liberty are just about over the threshold where they would control SIRI and it looks like Big Mel chose the path of stepping aside, rather than essentially work for his sometimes-adversary.
Healthcare, Biotech, Pharmaceutical:
Dendreon (DNDN): Still on the earnings front, Dendreon is also set to report this week. Although revenue is predicted to be significantly higher than the same quarter from the previous year, the actualities are still far from the lofty expectations that came along with the historic Provenge approval of 2010. Shares dipped to below the four dollar mark last week as the market as a whole dropped, marking a nearly forty percent downturn since the summer months. The lower shares drop, the more probability - at least for the time being - that some may play the stock in hopes of a potential turnaround. This week's report could offer some insight into how much rebound potential is held with Provenge sales, although the basis of any argument that supports a near-term rebound may lie with the expanded insurance coverage provided by Aetna (AET) - and it still may be a bit too early to measure that effect. Investors will also be looking for any positive effects of recent cost-cutting measures.
MRI Interventions (MRIC): Moving away from earnings reports, but still looking at earnings numbers, MRI Interventions is another company that has demonstrated earnings growth over the past few quarters and could potentially be on the verge of a breakout. MRIC has developed the ClearPoint and ClearTrace MRI-enhancing systems that provide medical professionals with real-time imagery during complicated procedures on the brain and heart, respectively. The company has been successful in methodically implementing the ClearPoint system into the field of brain surgery - attracting Boston Scientific Corporation (BSX) and Brainlab along the way - and proof positive that growth trends are in the works may be the stark increase in revenue generated by the 'disposable items' associated with ClearPoint procedures. That's a key point to note for MRIC - the company not only receives revenue on the sale of its systems, but also on the related 'disposables'.
Synergy Pharmaceuticals (SGYP): Synergy shares had been hovering at prices closer to five dollars than four for the better part of a couple of months leading into last week before some increasingly volatile price action resulted in a drop to sub-$4 prices. A five percent rebound last Friday, however, and some still-pending trial catalysts makes SGYP again a stock to watch this week. The news attracting interest early last week revolved around the initiation of a Phase I clinical trial for the company's second GI drug, SP-333 in the treatment of ulcerative colitis (UC). As previously discussed, while Synergy was building a pipeline consisting of drugs that targeted multiple indications in other sectors of the healthcare industry, the development of another GI drug candidate strengthened the company at its core and threatened to eventually make it a big player in that arena. Some investors may have taken note, judging by the late-week rebound.
Lpath, Inc. (LPTN): It's been a tumultuous year for Lpath, Inc., but recent developments have again brought this company to the limelight. Early on in 2012 shares dropped significantly when an announcement hit the wires that inconsistencies (which proved to be unrelated to any Lpath trials) forced to FDA to temporary halt the company's iSONEP trials in the treatment of Wet AMD. iSONEP is devised from the ImmuneY2 technology that taps lipid-based therapeutics to target various ailments, including cancer. Pfizer came on board early in regards to iSONEP collaboration, adding additional intrigue to this company's story line. Pfizer also holds a first right of refusal to ASONEP development, as well, in the treatment of cancer.
Amarin Corporation (AMRN): Amarin shares pushed towards the thirteen dollar mark last week on increased volume when a report in the UK's Daily Mail indicated that AstraZeneca may be gearing up to make a bid for the company. The basis of the author's speculation is that AZ's new boss, Pascal Soriot, suspended a share buyback program in preparation for strategic acquisitions that could include Amarin's Vascepa. It's generally regarded on this side of the pond that Amarin will eventually be bought out, although each day that goes by without an offer raises speculation to the contrary.
OncoSec Medical Incorporated (ONCS): Shares of OncoSec Medical retreated heavily following a quick run that returned more than a double in share price over a few weeks time. The major spark for the rally came as the company received a European CE Mark certification for the OMS electroporation device, the baseline technology for the company's pipeline of products. Another report last week, however, also highlighted preliminary results from a Phase II trial for ImmunoPulse in Merkel cell carcinoma (MCC).
Explosive Trace Detection (ETD) / Global Defense:
Implant Sciences (IMSC): Continue to keep Implant Sciences on the radar. Having been relatively silent of late in regards to the progress being made with Transportation Security Laboratory's (TSL) testing of the company's QS-B220 explosives and narcotics trace detector for potential future use in air cargo screening, an update last week from the company CEO noted that the final stages of testing would be complete over the near term. The TSL is the testing body of the Transportation Security Administration (TSA) and a near-term approval of the QS-B220 could allow Implant to take well advantage of a key December 3rd deadline imposed by the TSA stating that all inbound-US air cargo on passenger airliners will be screened for explosive traces. Implant has compiled a management team well-respected in the industry, settled short-to-mid term concerns of looming debt, and continued to grow its business internationally; the TSA approval could launch the company into the mainstream of the homeland and airline defense industries.
IMSC shares closed Friday up by five percent.
Roundup: As mentioned in the opener, it's rare when one trading week provides so much game-changing excitement as to potentially have global implications with every tick upwards and downwards. The markets are still uncertain of who will occupy the White House for the next four years, which means the jittery and volatile mood will continue this week as earnings likely continue to roll in looking unimpressive. In essence, too, the Friday jobs report could hold this election in the balance. President Obama has a strong following of people that may be waiting for just the right sign at the opportune time to convince them that his strategies of the past four years have borne fruit, and that report right before an election could reinvigorate the hope that was the basis of his last campaign. Will it all come down to one report? There's got to be more to it than that, but in today's society people tend to ask only, "what have you done for me lately?"
The wild card is Sandy. How many people will not go to the polls thanks to the calamity that Hurricane Sandy will bring with her? The battleground state of Florida looks to have been spared her wrath, but others may not fare so lucky.
Meanwhile, the markets will move on - and there's sure to be a fair share of spikes, dips and outright action all week long, regardless of all the political and hurricane-driven waves that may come our way. The biggest wave of all, though, could be Hurricane Eli storming Dallas.
To all those hunkering down on the east coast - stay safe, and I raise a glass to you.
Disclosure: Long AMRN, IMSC, SGYP, DNDN.
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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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