Just as easily as the markets drop, they too can rebound - as proven this week with the DOW's recovery back to the 13,500 mark on not-so-disappointing earnings reports by some key players in multiple sectors and continued encouraging economic indicators, including a boost in housing starts to four-year highs that reinvigorates enthusiasm in the sector that has arguably taken the worst hit since economic crisis of a few years ago. The positive mood spread globally as Asian and European shares also enjoyed early-week market stability.
Back in the US, a huge shakeup in the banking sector overshadowed the earnings talk as Citigroup Inc (C) CEO Vikram Pandit surprisingly stepped down, automatically leading investors to concentrate more on the future direction of that company than on the present day earnings. Bank of America Corp (BAC) emerged from its own earnings report relatively unscathed, beating estimates on one account, but missing on another. The mixed report detracted little from what's looks to be rebounding housing and earnings numbers and financial headlines following the report indicated that the sector could be in for an overall upswing, with eyes again towards the future.
There were some big disappointments, too, although none that were unexpected. IBM (IBM), for example, was hammered by five percent on Wednesday as the earnings report and guidance validated previous comments indicating that earnings could take a major hit as the company struggles to battle the growing trends of smartphones and tablets.
While the earnings season continues to play out, the markets remain fairly steady, for the time being, as there have yet to be any major disappointment stories play out - at least none that were unexpected. There has, however, been a touch of volatility on a week-to-week basis that creates some trading and buyign opportunities.
With that being said, there are - and will be - plenty of stocks on the move to keep on the radar - here's just a few of them...
Citigroup Inc: Shares of Citi have been on the move since the announcement of the big change at the top. Volume has been up significantly, too, and the share price set a new 52-week high on Wednesday. Earnings were relatively in line with expectations, but investors were more interested in the future of the company with Pandit out - and judging by the quick spike in share price, the street has welcomed the news. Some expectations have shares of Citi continuing the surge through the forty dollar level and beyond, but as is always the case with quick price spikes, the threat of profit taking also looms - especially given the fact that banking concerns in Europe always threaten to hamper the markets back home. Additionally, while the signs are there - along with economic indicators to support - that the economic recovery is in full swing, the market has assumed as much before, only to be handed another swift correction. The mood is high, though, for Citi shareholders. Many have called for Pandit's ouster long ago and now that the surprising development has in fact unfolded, a new wave of interest could flow into the stock, 52-week high or not.
One to watch as a new and refreshing direction for Citi unfolds.
Industry/Clean Energy :
FuelCell Energy (FCEL): Shares of FuelCell Energy have been on the move higher this week, rising by ten percent back to the dollar mark after a flurry of new announcements and a report by Bloomberg may have renewed investor interest and confidence in the company. FuelCell, which develops and produces fuel cells for commercial, industrial, government and utility customers, had run to nearly two bucks earlier in the year after news of a large cash infusion from a South Korean partner coincided with bullish coverage by both Forbes and Bloomberg to create the perfect storm for a share price run. A stock offering killed the rally, however, and shares have yet to recover.
This week's news could help to reverse that trend, as demonstrated by the recent run. Bloomberg noted on Tuesday that the company has entered into the second phase of a $3 million award from the U.S. Energy Department for the advancement of a carbon capture project geared towards reducing dangerous emissions and the FCEL also announced key milestones regarding its fuel cell power plants both domestically and abroad. These updates underline the potential of this company to play a key role in fueling the future with clean energy fuel cells and associated components and investors may be regaining confidence to that effect if the run back to a buck is any indication. Some will still be skeptical, however, until profitability is reached.
Still, FCEL is a stock on the move for the week.
Healthcare, Biotech, Pharmaceutical:
Dendreon (DNDN): Already identified as a stock to watch this week due to a Reuters report that questioned the interpretation and presentation of Provenge Phase III data, Dendreon was quick to rebound this week, although only modestly, and jumped by three percent during Wednesday's trading session. The mid-week rebound may not be an overall indication that investors have regained full confidence in the company's ability to register rapid gains in Provenge revenue, but the October 30th earnings date stands as a milestone day for investors to entertain those possibilities while also gauging how effective the cost-cutting measures of the past year have become. Analyst estimates for the quarter are not far off from what the company registered during the last quarter, but any surprise to the upside could spark a further rally than the three percent seen this week. Moving forward, the expanded coverage by Aetna (AET) should help on the revenue front, although some are still concerned about potential competition from Medivation's (MDVN) recently-approve Xtandi and Johnson & Johnson's (JNJ) Zytiga. Regardless, DNDN is revisiting levels that could make it an attractive rebound and/or growth play again. Already, the modest gains realized since the recent lows have demonstrated that this stock could return decent trading gains while waiting for the full story to play out.
Sunshine Heart (SSH): Shares of Sunshine Heart have also been on the move this week, although to the downside, and lows were set on Wednesday that had not been previously seen for months. Leading the charge to the downside may have been some investors questioning the ability of the company to maintain its cash position while moving forward with a pivotal US trial for the C-Pulse Heart Assist system, a device that has thus far proven to not only halt the progression of heart failure in patients with Class III and ambulatory Class IV heart failure, but potentially reverse it as well. Additional concerns were raised that competition from Heartware International (HTWR) and Thoratec (THOR) would hamper the company's ability to move C-Pulse into the mainstream anyway, even if the trial results in the US turned out positive. Yet additional concerns have been raised regarding the company's 2015 forecast for market of its medical device.
While it is always a wise idea to entertain a story from every angle, there are also other facts and developments regarding Sunshine to consider that may not be surrounded by all doom and gloom. Earlier this year Sunshine received a milestone approval for its device in Europe, which some consider as a much larger market than even the US for treating Class III and ambulatory Class IV heart failure. The company expects to register its first European sales during the current quarter, providing another potential catalyst to coincide with the US trial launch. Investors keying in solely on the US sales potential will concentrate solely on the probability of the US trial to last multiple years, but those with Europe in their peripheral vision may be enticed by the potential for the product to grow over there.
One major advantage that C-Pulse may have over other 'heart assist' products already on the market - and said to be in direct "competition" with Sunshine's product - is that C-Pulse is implanted outside of the bloodstream, making the implantation procedure minimally invasive, when compared to overall heart surgeries and other procedures that introduce foreign bodies directly into the blood flow. With that in mind, C-Pulse is not competing with products from HTWR and THOR, for example.
Regarding financing, there are always concerns that a developmental company will need to raise additional funds at some point in time. Sunshine recently conducted a financing deal that gives the company a solid cash position until the mid-point of the US trial. Additionally, an amended S-1 filed by the company at the time of the offering indicated that a large strategic investor has come on board to assist in developmental funding. Such a relationship could also come in handy later on down the road, should Sunshine find the need to raise money again, and speculation could also be given to the fact that a partnership or buyout could materialize as a result. The mid-way point in a major trial is a good time to judge overall potential success, and the strategic investor may have had that in mind when Sunshine funded itself through the trial mid-way point.
With shares dropping this week and with the company positioned to register its first sales in near-term time, Sunshine is one to keep an eye on.
OncoSec Medical Incorporated (ONCS): OncoSec Medical makes the list of quick-movers again this week after a twenty percent rise on Wednesday that left the stock sitting at better than a double since the opening days of October. This week's drive resulted from a European CE Mark certification for the OMS electroporation device, the baseline technology for the company's pipeline of products. Electroporation consists of delivery treatments directly into targeted cells using electrical pulses. This strategy has proven to be an highly effective delivery method, given that the electric stimulus spurs the cells to contain a drug or treatment more effectively than standard delivery without damaging the surrounding tissue. A CE Mark approval allows a company to commercialize a product in Europe and this event marks a very significant milestone for the company. Investors would tend to agree, given the twenty percent spike following the news.
From the OMS platform, OncoSec has created two technological pipeline paths, ImmunoPulse and NeoPulse. ImmunoPulse uses the electroporation process to spark a patient's immune system to target cancerous cells itself while NeoPulse uses the OMS technology to destroy cancer cells using less harmful doses of bleomycin, a highly effective but also highly toxic anti-cancer drug. Both have proven effective in early studies and the company has stated it intends to look for potential partnerships and strategic agreements to bring the technology to market. The CE Mark news provides another piece of the puzzle for the company to achieve those goals.
Roundup: The market mood is merry this week, and investors who have played the recent drop and spike accordingly have done well. Economic indicators also look encouraging this week and the disappointments on the earnings front look to have only effected specific stocks and companies, not the market as a whole - as was the worry. The tide could change, though, with earnings season still in full swing and many key player still set to support, so investors should be prepared for any action. European economies are making news again, especially Spain's, and investors should also watch for trends across the pond that may effect trading over here. The remainder of the week could be exciting for the companies listed above and for the markets as a whole, so...as always...Happy Trading!!!
Disclosure: Long FCEL, DNDN.
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