VFC's Stock House Weekly Stock Watch, Week of 3 December
This week's stock watch list of hot stocks to watch includes: GM, F, YUM, MCD, IMSC, SGYP, IRWD, FRX, AMRN, C, TEV, AZN, LPTN, PFE, JAZZ, PCYC, FB, ONVO, UTHR, CPST
This week, VFC's Stock House, an information and research outlet that brings ideas and opens discussions to a broad spectrum of investors, examines the impact that fiscal cliff negotiations could have on the markets while also taking a look at multiple stocks in various sectors that may be individually affected.
A full version of this week's report is available by visiting: http://vfcsstockhouse.com/blog/article/-weekly-stock-watch-week-of-3-december-gm-f-yum-mcd-imsc-sgyp-irwd-frx-amrn-c-tev-azn-lptn-pfe-jazz-pcyc-fb-onvo-uthr-cpst
Talks initially looked quite promising in the immediate days following last month's election, but the two sides look to have dug in their heels in an effort to protect their respective bargaining chips. That means the markets are most likely going to be edgy as negotiations intensify.
The rapidly-issued news headlines have thus far detailed every trivial (or not so trivial) update regarding these political negotiations and stocks traded in kind, moving up and down on a whim, as demonstrated by Friday's volatile intra-day moves as multiple updates were offered from both sides in Washington. In the end, though, the markets managed to hold their gains from the previous week and the DOW closed again at the north side of the 13,000 mark...for additional insight visit: VFC'sStockHouse.com
Yum! Brands Dips Ten Percent
Yum! Brands (YUM) helped kick off the food and beverage earnings season on a positive note in early October with an earnings report that beat expectations on margins, although revenue came in a bit below the expected mark. That was enough to send shares flying by ten percent at the time as investors were also encouraged that YUM, while improving margins, did not take as much as a hit as expected from the slowdown in China, while other companies did. The enthusiasm waned last week, however, when the company issued guidance for the remainder of this year and full-year 2013 in preparation for its upcoming shareholders meeting and it was revealed that a four percent growth slowdown is expected from sales in China. The revised guidance sent YUM shares swirling ten percent on Friday, giving back the gains achieved after the last quarterly report was released in October.
Explosive Trace Detection (ETD) / Global Defense:
Implant Sciences Banks Largest Order In Company History
Last week we noted that Implant Sciences (IMSC) was making significant strides in global sales, even as investors awaited final word from the Transportation Security Administration (TSA) on validation and approval of the company's Quantum Sniffer (QS)-B220 explosives and narcotics trace detector in use for air cargo screening. That trend was exemplified again on Thursday as Implant announced shipment of the largest order in the company's history - a deal for six million dollars worth of QS-H150 handheld explosives trace detectors and associated support destined for India's Ministry of Defence. This deal comes on the heels of numerous other orders to high-threat regions announced over the past few months and could be a key reason why one Implant employee noted that the production line was "bursting at the seems" during a media broadcast aired this summer.
Shares spiked to over the $1.30 mark when the news was announced on Thursday, but closed Friday down by over eight percent on volume nearly double the norm. Investors should note, however, that there is a group of shorts in this stock that has been looking to keep the share price down and those guys won't like news of a six million dollar order.
Monday marks a key date, too, if not for the company, at least for the sector into which it intends to move. According to previously released information by the TSA, come December 3rd all air cargo inbound to the US on passenger airliners will be expected to be screened for explosive traces. The QS-B220 could be positioned to play a large role in making that happen, should it pass the testing and validation phases with the TSA. With enthusiasm risen as a result of the India order, investors will now anxiously await any potential TSA news.
As noted in previous discussions, Implant's QS technology has significant advantages over its competitors, most notably that it does not use radioactive particles to do its job. Implant's Sniffers also offer a much quicker 'clear down' period for rapid use, meaning a QS only needs seconds to reset itself for another test while the same action for competing technology takes minutes.
Healthcare, Biotech, Pharmaceutical:
Synergy Pharma's Climb Continues
Synergy Pharmaceuticals (SGYP) has been on a tear since hitting lows of near the three dollar mark just weeks ago. That rise continued on Friday as SGYP jumped another eight percent on volume of roughly ten times the daily norm. The nearly four million shares traded was the highest one-day spike since the summer months and will cause this stock to appear on many-a-radar screen this week. No news was released in conjunction with Friday's price and volume spike, but the company's President and CEO, Gary S. Jacob, Ph.D, presented at the 24th Annual Piper Jaffray Healthcare Conference in New York City this past Tuesday. Encouraging statements from management leading into a major catalyst event could always help form the 'perfect storm' for a pre-milestone price run, and that may be what we are seeing here.
As those who have followed 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. 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). Of note, Synergy has already registered a licensing deal with Ironwood regarding the Linzess mechanism-of-action in return for payment of modest royalties, should Plecanatide make it to market...
Amarin Continues To Move After Initiated Coverage By Citi
Shares of Amarin Corporation (AMRN) started to rebound early last week after Citigroup (C) initiated coverage of the company with a twenty dollar price target to support a rating of 'Buy.' The move higher continued into the closing bell on Friday where a late-day spike left AMRN up by another three and a half percent leading into the first week of December trading. A recent update by the company indicated that it would hold off hiring a sales force for Vascepa until the first half of this month. Previous expectations had it that - should the company decide to go-it-alone in commercializing its flagship product - late November would have been the cut-off to get a sales force in place.
The hiring delay should not spark alarm for the average investor, in my opinion, as it is likely related to the fact that the FDA has yet to determine whether or not Vascepa will warrant status as a New Chemical Entity (NCE). Additionally, it could be taken as a sign of confidence from the company that it still believes a partnership or buyout deal could be realized over the short term, hence the wait to hire. At the very least, Amarin looks to believe that once (if) it does pull the trigger on hiring, the force can be quickly geared up to effect the early-first quarter launch that has been advertised.
Internet / Technology:
Facebook Pushes Thirty Bucks
Just five weeks ago Facebook (FB) shares traded for under twenty bucks and a bearish mood surrounded the stock as investors fretted over the pending expiration of IPO share lock-ups that would flood the market with nearly a billion more shares over the ensuing months. One of the largest lock-up expirations took place a few weeks ago and - regardless of the aforementioned concerns - investors holding the newly-available shares chose not sell, a move that sparked a rally in share price as other investors took that as a strong vote of confidence. Shares continued to rally last week and FB closed Friday at twenty eight bucks following another two percent run and volume has picked up significantly. Now is where investors will look to determine whether this run is for real or whether those holing all those expiring shares will sell into this latest spike.
Pfizer Option Could Send Lpath Shares Higher
When trading in the small pharma/developing biotech sector, the name of the game is opportunity. Although the 'buy and hold' mentality is all but a strategy of the past for many investors who have opted to play the wild swings of current-day trading to bank quicker profits, there is still something to be said for following a story, sticking with it and averaging down while waiting for major catalysts to play out. Take Jazz Pharmaceuticals (JAZZ) or Pharmacyclics (PCYC), for example - the buy and hold game played well there for investors who bought-in when those companies were trading relatively below the radar. Those keeping an eye on Lpath, Inc. (LPTN) may have noticed that shares have slipped to the six dollar mark, even dipping below that point at times, since it filed its latest quarterly report a couple of weeks ago. That may have presented investors interested in accumulation into a developing technology the opportunity to take to take advantage of the dip as some major catalysts could come to fruition in 2013, most notably relating to trial progress and a partnership with Pfizer (PFE).
Lpath has become a recognized leader in the field of lipid-based therapeutics. Through its proprietary ImmuneY2 platform, the company has developed two primary product candidates, iSONEP and ASONEP, which target the multi-billion dollar markets of Wet AMD and cancer, respectively. Noting that potential, Pfizer jumped on board early with a deal for iSONEP that netted fourteen million dollars for the company at the time. Pfizer also retains a 'first right of refusal' for ASONEP, too. This partnership could soon come into play again as iSONEP trials advance and Pfizer decides whether or not it wants to "exercise its option for exclusive worldwide rights" to the product, as outlined in the latest 10-Q. Such a catalyst, should it come to frution, would add immediate value to the LPTN share price since, as Lpath would be subject to receive an 'option fee' and hold the potential to receive multiple milestone payments along the path of development, should iSONEP success continue through late stage trials. If the product made market, then Lpath would be entitled to double-digit royalty rates on sales...
Organovo Holdings (ONVO): In similar fashion to Lpath above, Organovo may be another one trading below the radar that could start looking like a nice accumulation opportunity as a key catalyst involving Pfizer could unfold over the near term. Organovo, as previously discussed, has developed a 3D printer - the NovoGen MMX Bioprinter - that, in conjunction with regenerative medicine expertise, can generate 'bioprints' of human tissue. In looking at the short to mid term, these prints can can be used as disease models to enable more effective therapeutic drug discovery and development, but over the long term the company is looking to apply this technology to generate replacement organs. Given the scope and potential of such a forward-looking technology, Organovo has already landed two major partnerships - one with Pfizer and another with United Therapeutics (UTHR). These deals have already generated over a million dollars for the company's coffers, but the Pfizer relationship is worth watching over the short term as the current agreement is set to expire at the end of this year. That provides a short term catalyst for ONVO shares while the long term potential continues to unfold.
Roundup: Early indications are that investors will play the markets with optimistic caution as European shares opened higher on Monday and the Euro hit multi-week highs. US market futures looked to follow suit. The enthusiasm was sparked by news of reinvigorated growth in China, which could bode well for companies such as Yum! Brands (as mentioned above), although the upbeat mood was still tempered by cliff negotiations in the United States. Those talks were off to an early start this week as US Treasury Secretary Timothy Geithner on Sunday predicted that Republicans would eventually give in and allow the tax hikes against which they've furiously fought, but the Speaker of the House of Representatives, John Boehner, issued a rebuttal to those comments indicating that the two sides may still be far apart - or at least playing like they are in public light. At the end of the day we know there must be compromise to get a deal done, so some tax hikes and spending cuts should be considered all but an eventuality - the question is just how much and when.
Until we know that much...Happy Trading!!!
Disclosure: Long AMRN, CPST, IMSC, MCD.
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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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