VFC's Stock House Stock Watch Wednesday, 28 November
Stocks in the spotlight today include SGYP, CLSP, IRWD, FRX, MRIC, SI, BSX, AMRN, TEV, AZN, C, GMCR, SBUX, IMSC, CTSO, SIRI, GE, JWM
On Wednesday, VFC's Stock House, an information and research outlet that brings ideas and opens discussions to a broad spectrum of investors, identifies multiple stocks, stories and investing ideas to consider during the current market volatility. For a full version of Wednesday's report visit: http://VFCsStockHouse.com
Synergy Moves Through Five Dollars
Earlier in the month of November shares of Synergy Pharmaceuticals (SGYP) hit a low of $3.19, but on Tuesday SGYP pumped through the five dollar mark for the first time since the opening days of September. Such a rapid turnaround attracted the attention of investors - as volume topped a million shares traded for the first time in months - and brought to focus Synergy's upcoming milestone catalyst that could launch the company into a status as a mainstream player in the GI market.
In regards to SGYP dropping to the low threes, such a move could be in relation to the company's merger with Callisto Pharmaceuticals (CLSP). The deal was announced, in part, to eliminate a forty percent interest by Callisto that was generally regarded as a roadblock to attracting more professional or institutional investor interest. Had the announcement reached its intended target and attracted such interest, those guys would likely want in at lower prices than where shares were trading at the time, hence the drastic drop to three.
The rebound, however, plays into the accepted theory of the sector that has developmental biotech or small pharma companies realizing a run-up leading into a milestone event. Previously these run-ups occurred leading into FDA approval decisions, but more often than not these days the run-up comes before the announcement of late-stage, pivotal trial results. That is likely the case with Synergy.
As those who have followed - and probably traded - the Synergy story well know, results from the recently-completed Plecanatide Phase IIb/III trial in the treatment of chronic idiopathic constipation (CIC) are slated for release come the first week of January. With the attention given to that milestone date by those watching this stock, it should be expected that volatility and volume will grow during the closing weeks of 2012. Results are generally expected to roll in positive, given the product's shared mechanism-of-action with the recently-approved Linzess, which was developed by Ironwood Pharmaceuticals (IRWD) and partnered with Forest Laboratories (FRX)...
MRI Interventions Named 2012 Global Company of the Year
MRI Interventions (MRIC) also demonstrated significant movement on Tuesday with volume rolling in at nearly quadruple the daily norms. The spark igniting the volume spike may have been an announcement that the company had been named the the "2012 Global Company of the Year Award in Image-Guided Neural Interventions by Frost & Sullivan, a global business research and consulting firm," as outlined in a Tuesday AM press release. With this award, Frost and Sullivan looks to recognize novel, new technologies that have been supported by successful implementation plans and strategies in their respective fields. MRIC won the award on the basis of its ClearPoint MRI-enhancing system that provides medical professionals with real-time imagery during complicated procedures on the brain. As noted previously, this company has noted significant growth over the past few quarters and recently boosted its sales force in order to support plans of more growth into the brain surgery sector both in the United States and Europe. The Frost and Sullivan award can be viewed as a public validation of the growth strategy.
As MRI broadens its exposure with an increased sales force, it's likely that the company could come up in discussions involving mergers and acquisitions in the healthcare and medical device sectors. Already MRI has standing partnerships with Siemens AG (SI), Boston Scientific Corporation (BSX) and Brainlab and as the ClearPoint system develops and continues to build a performance records, those partnerships could either grow or turn into all-out acquisitions, as discussed by another Seeking Alpha author this week.
Amarin Spikes Five Percent
Shares of Amarin Corporation (AMRN) were on the move Tuesday after Citigroup (C) initiated coverage of the company with a 'Buy' rating and stamped a price target of $20 on the stock. The enthusiastic coverage spurned weeks of speculation by other media outlets that a delay in deciding on a New Chemical Entity (NCE) status by the FDA for Vascepa would ultimately lead to the company going-it-alone and keep the share price from rising any further. According to the Citi report, Vascepa is likely to receive the five years of coverage provided by a NCE designation. Additionally, its the opinion of Citi that Vascepa will ultimately reach the billion-dollar potential that many have predicted it has on the open market. Also providing the stock a boost early this week was the issuance two more patents from the US Patent and Trademark Office. Many believe that even without the NCE designation, Amarin has fortified its protection of Vascepa with a strong patent portfolio.
The move to the north side of twelve is good news for Amarin investors, needless to say, especially for those that re-loaded their positions in the tens just trading days ago. Although entirely confident, the Citi opinion is still just that - an opinion - and there is still the chance that the company will be forced to go-it-alone, should a partnership or buyout not be announced soon. Most likely, all relevant parties are awaiting a final NCE designation in order to put a more accurate value on Vascapa, which - according to Citi's report this week - should be viewed as a billion-dollar blockbuster. Pipe the Citi coverage in with any additional takeover chatter (Teva (TEV) and AstraZeneca (AZN) have been most-recently linked as potential buyers), and it's likely that Amarin could easily return to previously-traded levels.
Green Mounting Roasting Profits
Some concern was mounting regarding future growth for Green Mountain Coffee Roasters (GMCR) as some of its patents expired and also since Starbucks (SBUX) started making a move into the single-serving coffee and K-Cup markets, but the company helped to temper those fears this week with an earnings report that beat the street and sent shares flying as high as twenty two percent during Tuesday's after-hours trading. In another sign of confidence, management also boosted its forecast for the coming quarters, too, helping to spark the late rally Tuesday and the early rally on Wednesday morning that spiked shares as high as twenty three percent in pre-market trading. Short interest is high with GMCR, with roughly a quarter of the float traded short, which could lead to a squeeze if shorts feel pressured by the encouraging signs of Green Mountain's report.
It's likely, though, that shorts will still consider the patent expirations and growing competition from Starbucks as a threat to GMCR's rosy forecasts and attempt to keep shares honest. To date, the company has not lost its licensing partners as a result of patent expirations, but this will be a story to watch. Starbucks had also issued a positive report earlier in the earnings season, emphasizing that there may be enough room for two super powers in this market.
Also noteworthy for Wednesday:
Implant Sciences (IMSC) announced on Tuesday morning a deal with another new distributor in the Middle East. All attention on this stock is being paid to the ongoing certification of the company's Quantum Sniffer (QS) explosive and narcotics trace detection (ETD) technology, but moves into security networks throughout high-threat areas of the globe should also be noted as potentially significant avenues for revenue growth. While Syria and Libya gain all the attention these days for turmoil in the Middle East, sporadic threats have also increased in other areas of the region, specifically in the Gulf countries. Recent deals by Implant in these areas is evidence that security agencies are taking notice and taking action. It's also evidence that the sales team has positioned the company to capitalize on the growing mobile threats.
Cytosorbents Corporation (CTSO) clarified its earnings release earlier this week which led to a rebound of more than ten percent in share price. Shares had slipped by about that much last week in response to the original report. Cytosorbents has been engaged in the commercialization of CytoSorb in Europe, a blood purification device that treats sepsis and other conditions where high cytokines are present. The roll-out has been slow and methodical, due to the company attempt to commercialize while smartly utilizing its limited cash resources, but the product has started to take off a bit, as evidenced by this quote by the CEO in his clarification of earnings, "That we have booked more revenue in the first 52 days of the fourth quarter than we did in the first 9 months of 2012, is a reflection of the increased effectiveness of our sales efforts and interest in our technologies." Investors should still temper expectations for the time being, but should the trend continue as reported in the current quarter, then patient investors could be handsomely rewarded. CTSO shares spiked to nearly four times their current levels when CytoSorb approval was announced last year.
Roundup: Overseas trading on Wednesday was tempered and it's likely that US trading will follow suit as attention is paid to fiscal cliff negotiations in the US. As discussed above, the market volatility surrounding these talks makes it a trader's market, but opportunities to accumulate particular stocks with an eye towards next year or beyond could show themselves into any dips that may materialize. During the drop of 2008-09, for instance, shares of SiriusXM (SIRI), for instance, traded for a mere nickel. Others, such as General Electric (GE) and Nordstrom (JWM) traded for well under ten dollars and twenty dollars, respectively. In any market - especially in the down markets - the opportunities will arise.
All it could take to lead to a broad rally is cooperation in Washington, as the economic data has been encouraging. Sales on Black Friday and Cyber Monday - especially on Cyber Monday - looked great and consumer confidence is rising. Retailers had some nice surprises during the earnings season and the housing data looks good again. All this spells potential rally once the fiscal cliff issues are resolved. Before that happens, though, we should expect the volatility that's been noted over the past weeks and another potential dip leading into the December tax-loss selling season. Often times, that's a pretty good accumulation point for some stocks that have declined this year, but are positioned to return solid gains the following year.
There's a lot to keep an eye on, and the climax of all excitement has got to be the New York Mets' offseason signings. Can you smell a ring next year?
Disclosure: Long AMRN, CTSO, GE, IMSC, SGYP, SGYPW.
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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 VFC’s 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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