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. Although focusing intently on the biotech and healthcare sectors, due attention is also given to potential market-moving or game-changing companies in a broad variety of sectors and industries. The 'Weekly Stock Watch' will also introduce new companies for coverage and identify some stocks that may have entered 'buy territory'.
The markets recognized another strong week last week, with a slew of positive earnings reports boosting stocks higher each day and into the close on Friday.
The most notable report may have come from Apple (AAPL). Although AAPL shares had slipped over the previous weeks, another strong round of earnings that again confirmed the company's dominance in the tech arena quickly sent shares back to over the six hundred dollar mark.
Earnings for the quarter registered at a good two bucks over the general analyst consensus and the strength of the iPhone and tablet sales numbers was a fine demonstration of the continued spending of tech-hungry consumers, even while some argue that the economy has yet to gain full steam again or might be on the brink of another setback.
Another example of strengthening consumer demand and spending came from Amazon (AMZN).
A blow-away quarter - as it was considered by most if only because the numbers beat analyst estimates, although revenues declined - led to a huge rally on Friday that sent shares north by over fifteen percent on volume nearly quadruple the daily norm. While the numbers emphasized huge demand from consumers for the company's Kindle Fire - and just about all of the online retailer's repertoire of products - it was the fact that management finally had the costs of swift expansion under control that enticed investors the most.
Past quarters indicated that those costs were eating into profits, which became worrisome to investors, but the worries looked to be quelled on Friday.
Both Apple and Amazon were success stories of last week that will also be worth watching into the new trading week, but there was still more where that came from.
AT&T (T) and Merck (MRK) both beat analyst estimates while Expedia (EXPE) destroyed forecasts and flew twenty five percent higher at points on Friday before closing the day up by over twenty three percent. Volume was six times the norm in support of that price spike and the strong hotel bookings posted by Expedia provide another example of strengthening consumer spending; either that or the GSA had a couple of last minute conferences to book last quarter.
It's also expected that Expedia will post solid hotel earnings next quarter, also, since the Secret Service will be required to book separate rooms for their night time entertainment.
Is anyone else sick of hearing about that story already? The shock and awe expressed by the media over the shenanigans in Cartagena is comical. My favorite was a CNN commentator just aghast at the fact that the Secret Service would allow foreign nationals in the hotel.
It's a foreign country, so of course there will be foreign nationals in the hotel. And the politicians who dare criticize? Come on now, that stuff is a typical night out in Washington.
Maybe Implant Sciences (IMSC) will have to now up its technology to be able to detect uninvited guests at these events in Colombia, along with the ability to detect explosives and narcotics that attracted the attention of the Colombian security forces who requested that the company's technology be part of a layered defense to help protect the event.
At the end of the day, there were much more relevant discussions that took place at the Summit of the Americas that could have more serious geopolitical implications than a few Secret Service agents carrying on - such as allowing Cuba to partake in key discussions regarding the region and the legalization of hard drugs that some leaders in South and Central America seek.
It's a shame that the news media is allowing this nonsense about the Secret Service to overshadow everything else that's important, including the continued lack of any real action in Syria. You feel like watching an episode of Police Squad when you're listening to these world leaders threaten more sanctions on the Assad regime - Guys, you're only fooling yourselves. No one is impressed or in the least bit rattled by the "tough talk," least of all not Mr. Assad.
But back to the earnings season. Although there were plenty of feel-good earnings stories last week, there were a few uh-oh stories, too.
Exxon Mobile (XOM) was a notable miss, but Netflix (NFLX) shares were absolutely hammered after management announced a quarterly loss, modest forecasts for the next quarter and predicted subscriber growth that didn't sit well with investors. When NFLX took a quick, dramatic dip late last year, shares were eventually able to post a solid rebound. Eyes will be on the company again to repeat that performance and prove that the intended move to a more robust streaming service is everything that management thought it would be when last year's retracted decision to split the company's two core services sent shares south in the first place.
The idea was probably a sound one, but the timing might have been poor - and it's generally not a good idea to introduce price spikes along with news that might not sit well with the consumers anyway.
Earnings season is far from over, but there's still plenty of other stories worth watching, too.
Here's just a few of them...
Synergy Pharmaceuticals (SGYP): Shares of Synergy Pharmaceuticals (SGYP) have been on a tear over the past few weeks, having gained close to fifty percent since the share prices of late March on volume that noticeably picked up during last week's trading.
Although the company had already been gaining attention and notoriety from numerous analysts for the huge potential of its flagship product candidate, Plecanatide, in the treatment of chronic idiopathic constipation (CIC) and constipation-predominant irritable bowel syndrome (IBS-C), it might have been an FDA setback experienced last week by Synergy's main competitor that sent a volume surge the way of SGYP.
Ironwood Pharmaceuticals (IRWD) and partner Forest Laboratories, Inc. (FRX) are developing Linaclotide as a direct competitor to Plecanatide. Plecanatide has thus far in development showed that it can treat both CIC and IBS-C without causing the same side effect of severe diarrhea that accompanies treatment with Linaclotide, but Linaclotide has the advantage of being much closer to market than Plecanatide.
It is that advantage that no longer stood as strong after an announcement last week that the FDA would take an additional three months to review data before rendering a decision on Linaclotide approval. That extended time frame allows Synergy a full quarter to play catch up and, most importantly, takes a full quarter away from Ironwood and Forest to gain market share momentum before Plecanatide hits pharmacy shelves.
It's also worth noting the increased buyout speculation surrounding the sector as the result of offers tossed the way of Human Genome Sciences (HGSI), Illumina (ILMN) and Amylin Pharmaceuticals (AMLN) lately - especially when companies such as Pfizer (PFE) are loading up on fresh cash.
Results from the ongoing Phase II/III Plecanatide trial are due later this year, and with volume and price both increasing, SGYP is a stock to watch.
Immunocellular Therapeutics (IMUC): With a market cap of just over one hundred million, Immunocellular Therapeutics (IMUC) has held a firm and solid share price through the highs and lows of April's volatility, and there's no reason to believe that anything will change that pattern as a new trading month opens, especially with the 2012 ASCO meeting quickly approaching.
Many developmental-stage companies - such as Immunocellular - receive what could be called an "ASCO boost" around this time every year as new cancer-fighting technologies emerge and others progress through trials, only to gain increased exposure and recognition as a result of the attention paid to the conference.
With a technology that thus far in development rivals any other in the treatment of glioblastoma, and with numerous catalysts still due to unfold this year, it's safe to assume that IMUC will continue to be a stock to watch during the coming weeks and months.
Immunocellular's technology attacks cancer cells at the stem in order to keep the cancer from growing and spreading and its lead product candidate, ICT-107 for glioblastoma, has already returned some very encouraging results. The company has already expanded the amount of sites available for the ongoing Phase II trial and results from this trial are expected to be released within the year.
New technology was also recently acquired by Immunocellular, a move that instantly boosts and adds credibility to the pipeline as new cancer types will now be targeted for treatment.
It's also been discussed that the company is planning a move to the AMEX, or another larger exchange, over the short term. Not only does this move add more credibility to the company's stock, but it would also open up IMUC shares to a much broader group of investors who do not dabble in OTC stocks.
Given IMUC's strong showing over the past month in terms of sustaining its share price that was reached in quick fashion earlier this year, the current period could be one of consolidation before pending catalysts look to move the current market cap of $100 million higher.
Should the ongoing Phase II results look as encouraging as earlier data, then a much higher cap would be justified, according to the valuation of other companies in the sector at similar stages of development.
By no means is Amarin new to buyout chatter, as the company's CEO last year spoke of significant interest by large pharma at times last year after positive trial results were announced for AMR-101 in the treatment of high triglycerides, but nothing has yet to pan out - key word being yet.
After dipping to below ten dollars again earlier in the year amid increased volatility, AMRN was back above twelve bucks last week after a competing product was proven in late stage trials to not be quite as effective AMR-101, which instantly led to speculation that Amarin is being primed for a buyout.
It's been widely assumed that Amarin will seek an already-established partner to market its drug, if a buyout does not take place first, and that speculation has negated some negative developments on the patent front that led to a dip in share price over the past few weeks.
Volume and price were both rising late last week, keeping AMRN as a stock to watch during the coming week.
It should only be a matter of time before we hear of a buyout offer, in my opinion, and like so many others that we've seen over the past months, the first offer will not likely be accepted.
Siga Technologies (SIGA): Shares of Siga Technologies (SIGA) had been flirting with the three dollar mark for a couple of weeks, but strong volume late last week sent shares through that mark and will be worth watching into the coming trading week as well.
Although this company holds significant forward-looking potential based on its antiviral technology and awarding of a huge government contract, ongoing litigation in relation to a lawsuit filed by rival PharmAthene (PIP) has held shares down for the better part of the past year.
As it stands, Siga is required to split profits with PIP due to a partnership agreement that never panned out years ago, although Siga intends to dispute that verdict.
Meanwhile, shares have traded volatile enough to attract the traders, but as investors start to receive a better "warm, fuzzy" about the outcome of the PIP ordeal, shares could rebound quick - even on speculation.
As SIGA heats up again, it'll remain a stock to watch.
Premier Alliance Group (PIMO): Premier Alliance Group (PIMO) had a few up-volume days last week as shares traded in a range with more than a thirty-cent spread. This company is primed to take advantage of the increased regulation pouring out of Washington and state governments these days, especially in relation to energy incentive programs, and a slew of new orders banked earlier this year provide a key example of the company's pattern of success in building a solid foundation behind its advisory and consulting divisions.
The increase in volume and wide trading range last week could be an indicator that investors are taking positions in the company as it continues to grow its customer base.
With a market cap of just over ten million, Premier is building a customer and investor base that could fuel significant growth in the future. One key from the recent deals is the "in" that the company secured with the Department of Defense by providing an energy audit for two military bases in California.
The contract is significant because it is believed to be the largest-ever of its kind, but also because the DOD often comes back to established contractors for repeat services.
As the price action looks to stabilize after a volatile week, PIMO will be one to keep on the stock watch lists.
BioDelivery Sciences (BDSI) up another three percent on Friday with shares pushing the four dollar mark. Shares have nearly quadrupled since the opening days of the new year on quite a few encouraging developments and there may be more to come...Cel-Sci Corp (CVM) inching back towards the half-dollar mark, could be another ASCO play...Cytosorbents Corporation (CTSO), up three percent on Friday, has slowly been building a foundation in Europe for its medical device to treat conditions of high cytokines, to include severe sepsis...Keryx Pharmaceuticals (KERX) is back in play after positive trial results for Zerenex from the other side of the world. Insiders are also scooping this one up...Chanticleer Holdings (CCLR) - volume trickling in bodes well for the company that owns the rights to the Hooters restaurant name...Jazz Pharmaceuticals (JAZZ) still moving higher on positive price target and acquisition news...McDonald's (MCD) again spiking towards a hundred...Spectrum Pharmaceuticals (SPPI) well above ten bucks again on solid earnings and Fusilev growth...Pharmacyclics (PCYC) rising even higher on price target upgrade. That puts this one at a market cap of two billion with nothing in Phase III.
Disclosure: Long SIGA, PIMO, SGYP, IMUC, CCLR, CVM, CTSO. VFC's Stock House has been compensated by a third party, The ProActive Network, to provide research and coverage of Premier Alliance Group (PIMO.OB) for a period of thirty days beginning on 16 April. The goal of VFC's Stock House is to bring new ideas, companies and discussions to investors and readers. With respect to the increased amount of time necessary to maintain quality, VFC's Stock House is at times compensated from third parties to research and cover certain companies that fit the profile of what interests the readers of VFC's Stock House. While taking compensation poses as an inherent perception of bias in coverage, the ultimate goal is to bring ideas and information to the eyes of readers, who can then decide what is and what is not relevant.