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Sunday, November 25, 2012

Turkey Day Stock Watch: FB, YHOO, MSFT, AOL, RIMM, BBY, HP, AMRN, SSH,

How quickly the tide can change.  Barely a day after the markets rose in force on encouraging signs of cooperation in Washington and in the European Union regarding the 'fiscal cliff' and Greek bailout, respectively, the mood changed by Wednesday morning and investors are again skittish - at least according to some headlines - because of reinvigorated concerns over the same subject matter.  While there are no indications that talks in the US over the fiscal cliff have been derailed, there may be something to the European concerns as ministers over there failed to come up with a united plan on Tuesday to continue the flow of bailout cash to Greece in order to keep that country from going bankruptcy.  If you want to talk about cliffs, Greece is teetering on the economic edge of one now, sparking fear among investors and economists alike as the euro hit multi-month lows Tuesday. 

It also didn't encourage investors that France's credit rating also was cut.

The nervous mood could carry over into US trading leading into the Turkey Day holiday, if investors decide to pay more attention to events overseas than they do to those unfolding in the US, although Fed Chief Ben Bernanke issued words of caution of his own this week, highlighting the economic threats of not reaching a deal on the cliff.

Regardless of the movement, trading should remain light for the rest of the week.  Many will hit the road on Wednesday to meet family and friends to enjoy some Goose and Turkey while others - those who have fallen for the commercialization hype - will head out for Black Friday shopping on...Thursday?  Weak.

We can look towards next week for news as European financial leaders will meet again on Monday to pick up where they left off on the Greek bailout and it'll quickly become crunch time for the politicians in Washington to reach an agreement on either a deal or an extension for the fiscal cliff.  My money is on extension, given the short time frame these guys have for negotiations and because the newly-elected congress will not yet be in place.  We also need to consider that the government is even more slow and futile at getting things done around the holidays than it is normally, they need holiday routine and all, so those hoping for a quick deal may be sorely disappointed - at least for the time being.

On the good news side of the house, it's looking like the ongoing turmoil in the Middle East may be calming down, alleviating the potential of a drastic spike in oil and gas prices right around the holidays.  That could leave consumers with some extra cash-in-hand around the holidays to boost retailer sales.

There's a lot going on these days, and a lot to pay attention to heading into next year, but in the meantime here's a few updates on some stocks and stories that we've been keeping an eye on...

Newsmakers:  Headlines regarding Hostess Brands have been as up-and down as the markets have, with early-week indications hinting that judge-ordered mediation would keep the company from going under, but it only took a day for mediation to fail and put bankruptcy right back on the map.  Over eighteen thousand jobs are at stake with this deal, but the truth is that the Twinkie, Ho-Ho and Wonder Bread will all most likely be salvaged - although maybe not as Hostess brands - and many of those job cuts may just be temporary.  The amount of media attention this story has received is a near-travesty with all going on in the world right now, especially since thousands flocked to the supermarket over the past week to buy as many Twinkies as they could because the Today Show said that we would never see them again.  And they say consumers aren't sheep.

The patent wars continue.  It has become quite apparent over recent years that a company's true value is as much judged for its patent portfolio as it is for its products or services.  Evidence as such was demonstrated by heated wars between Facebook (FB) and Yahoo! (YHOO), while Microsoft (MSFT) and AOL (AOL) struck a billion dollar patent deal in order to alleviate any future litigation.  Owned patents are also a large part of the reason as to why Research In Motion (RIMM) wasn't written off by anyone as shares of that company collapsed and investors positioned for a potential rebound story.  Additionally, Google's purchase of Motorola earlier this year for over twelve billion dollars revolved a great deal around Motorola's portfolio of patents, and those patents are making news this week.

Litigation  is wrapping up between Microsoft and Google over royalties potentially owed Google by Microsoft for a license to the patents owned by Google's Motorola Mobility unit.  The two sides are literally billions of dollars apart and the outcome of this trial is relevant not just to Microsoft shareholders for the monetary value that the company may have to cough up, but also because it will be telling in regards to the value of any future deals that Google may negotiate over licenses to these patents. 

In regards to the share price impact of this specific litigation, it should be a non-factor, given that a few million, or even a few billion is relative chump change to any of the companies in question.  Microsoft should expect to walk around with a target on its chest, however, as it starts to make significant moves into markets dominated by other players, such as smart phones and tablets.

Earnings:

Best Buy (BBY):  Best Buy was a stock to watch this week on the earnings front because of the general positive earnings tone set by retailers earlier in the season, but also because any negative trends for the company itself would likely put this one on the danger list to become another Circuit City or Blockbuster.  The danger zone it was as the company announced disappointing numbers again for the quarter and shares dropped by thirteen cents as a result.  Trading volume came in at more than four times the daily norm.  Because of heavy competition in the retail sector for Best Buy, and because the company has again failed to capitalize on sector trends, this could be a dangerous play for those counting on a rebound story.  There's a distinct possibility that a savior could come in and stave off any further destruction, but there's just as much chance, in my opinion, that BBY will be hanging out in the single digits before long and may be hard-pressed to ever achieve the desired turnaround.

Hewlett-Packard (HP):  HP was another earnings news maker this week, announcing a near-nine billion dollar write-down in relation to an accounting scandal at its British software unit Autonomy.  Like Best Buy, HP could find itself and its share price in the hurt locker in the eyes of investors.  The Autonomy unit was identified by some as the key to transforming HP into more of a software and services-driven company than PCs and hardware, but the huge write-down could kill those hopes and follows another multi-billion dollar write-down announced last quarter.  The old adage goes that there is a lot of money that can be made by buying when others are selling - case in point the market drop of 2008-09 - but if others are selling for obvious reasons - like bad business practices and massive losses - and not just on emotion, then there may be reason to stay away.  HP's best days could be in the rear view mirror.  Shares dropped by nearly twelve percent on Tuesday following the report.

Healthcare, Biotech, Pharmaceutical:

Amarin Corporation (AMRN):  Heavily-watched Amarin shares traded relatively sideways this week as investors continued to await information from the company on the way-ahead plan following another FDA delay in issuing a decision on Vascepa's New Chemical Entity (NCE) status.  Some are still banking on the fact that the company will entertain any potential buyout deals that are on the table now, although others believe that it's time for Amarin officials to announce their intent to go-it-alone if any actual deal revolves around the NCE status.  Although the NCE status still remains unclear, Amarin again bolstered its patent protection with a Tuesday announcement that the US Patent and Trademark Office had issued yet another patent covering Vascepa on the open market. 

While NCE status receives the majority of investor attention these days, arguments have been made previously that Amarin is building enough of a patent portfolio to ward off any legal challenges anyway, whether Vascepa receives NCE or not. 

The announcement of yet another pattent issuance could support those claims.  As mentioned over the weekend, though, the company will soon need to decide whether or not it will out-wait the FDA because Vascepa's launch is expected to take place in January.  For that to occur, a sales force needs to be sealed soon, or a partner needs to jump on board.  Tuesday's patent announcement likely won't change anything, but any news relating to Amarin right now will spark discussion and debate over what's next.

Sunshine Heart (SSH):  Like Amarin, Sunshine Heart is another high-profile company to watch during the fourth quarter.  Having already marked significant milestones this year - including the European approval of C-Pulse, the IDE approval by the FDA for C-Pulse in the US and the positive trends noted in the results of the already-completed feasibility trial - the company also announced this week that the FDA has granted the unconditional approval to commence the planned pivotal trial in the United States for C-Pulse in the treatment of Class III and ambulatory Class IV heart failure. 

As previously discussed, C-Pulse is an implantable device considered much less invasive than other implantable devices on the market - from Heartware International (HTWR) and Thoratec (THOR), for example - given that the C-Pulse is implanted outside of a patient's bloodstream.  Additionally, Sunshine has relatively no competition for its device, given its target patient set of Class III patients.  Shares of this confirmation of trial approval sent Sunshine shares up by seventeen cents during the pre-market hours on Tuesday, before settling down along with the market as a whole as the day progressed.

Along with updates regarding this pivotal trial, investors will also be keying into future updates regarding the European launch of C-Pulse.  As mentioned above, the product received CE Mark approval over there earlier this year and Sunshine is planning a methodical launch, which could start registering sales as soon as this quarter.  The company used its third quarter report to recap the milestones met during the previous quarter and emphasize its business plans for the future, including the launch of the US trial and the commercial launch of C-Pulse in Europe.  With prospects of the company starting to realize revenue in Europe as early as this quarter - as mentioned above - and with the expectations of the US trial launch, multiple analysts have reiterated their positive outlooks on the company following the report.  Northland Capital Markets, for example, maintained its 'outperform' rating on SSH shares with an enthusiastic price target of $20.  Summer Street and Canaccord also reiterated their buy ratings on the stock, sticking with price targets of $26 and $12.50, respectively.

Sunshine also conducted a stock offering during the third quarter, positioning itself with funding expected to last through the mid-way point of the US trial.  A large - and still unnamed - strategic investor came on board with three million dollars during the offering and appointed a member to the board, hinting that potential partners or buyers of the Sunshine technology could already be waiting in the wings, pending additional trial results.

Roundup:  It should be an easy-going week from here on out.  Trading volume will likely be light and attention will be paid more towards friends, family and the holidays than towards the markets, but that doesn't mean that the trading opportunities won't open up in the meantime.  Next week it'll kick off again with eyes on the Greek bailout as the European fiscal authorities will meet again and try to get on the same page while politicians in the US attempt to do the same regarding the much-hyped fiscal cliff. 

Investors will also look for the positive trends in consumer confidence and the retail sector (aside from BBY and a few others) to turn into dollar signs during the shopping season - and the fourth quarter - while others will continue to take a 'wait and see' approach to the markets as the December tax-loss-selling season is now within sight.

All that will seem trivial to some, though, as many are still without homes or power following the wrath of Hurricane Sandy and many more around the world are facing crisis that are too often given little thought when our attention is paid internally and to the markets.  At this time of year, let's give thoughts to all those that need them.

Happy Trading, and Happy Turkey Day!!!

Disclosure:  Long AMRN, SSH.

Contact VFC's Stock House: vfc@vfcsstockhouse.com

Originally published at: http://vfcsstockhouse.com

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Friday, November 23, 2012

Weekly Stock Watch, Week of 19 November: AAPL, GE, GOOG, JPM, C, BP, WMT, ANF, HD, SKS, KORS, LOW, BBY, CMG, MCD, YUM, ONTY, DNDN, ONVO, IMSC, PFE, UTHR, AMRN, SGYP

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.

An up day on Friday wasn't quite enough to eliminate another overall down week for the markets as flare-ups in the Middle East and concerns over the pending fiscal cliff in the United States continued to play on the minds of investors, but an unusually cooperative tone in Washington over the past few days could ease worries of a protracted market dip as the cliff negotiations play out.  Some may take a "wait and see" approach, however, because it's truly been years since the words "cooperative" and "Washington" could be associated in the same sentence - and just because Republicans and Democrats are talking, it doesn't mean that a deal is going to get done before the 11th hour.  After all, American politics are so divided and polarized right now that neither side wants to be viewed as cohorting with the enemy, and too much cooperation may kill the cable news channel ratings, so there's likely much more drama to come regarding these negotiations - whether invented by the media types or not - meaning there should still be plenty of market volatility until the day a deal is announced.

Fiscal cliff negotiations may not prove as rough as previously thought if the politicians are serious about compromise and results, but the Middle East stuff could start to have an effect.  Increased tensions across the region could pull the US and other western nations into the mix while renewed instability is also likely to hit oil and gas prices, some of which has already been seen.  That could hit investors and consumers in the wallet right around the prime shopping season, potentially killing the momentum that has been built over the month of November for consumer confidence and the retailers.

Some investors are also taking note of Europe's double-dip recession and entertaining the prospects that the US, too, is far from free of the double-dip risk, especially without a budget deal having been reached between the two sides in Washington.

Amid the volatility, there is reason for optimism, too. 

The lower the market dips, the more those holding spare cash on the sidelines will be inclined to go long again, barring any continued bad news on the geo-political landscape, especially because fewer and fewer pundits believe that a fiscal deal will not be reached.  Those playing the drop could play the markets as they play there favorite stock, by 'averaging down' and returning cash back into the market a little at a time, as the opportunities arise.  Those that utilized such a strategy during the crash of '08 and '09 when the pundits had everyone afraid to buy made out like bandits during the recovery.  Few believe such a drastic drop will materialize in this instance, but buying when others are selling could prove a nice move in the event of any recovery, modest or not.

We've got a Thanksgiving-shortened trading week in store, and although it's easy to concentrate on who's got the largest turkey and who's offering the best Black Friday deal, this week is intended to give thoughts and thanks to what we do have, with consideration to those that who may not have so much.  A shout out goes out to those on Staten Island and other hard-hit areas of the eastern seaboard still reeling from the effects of Hurricane Sandy, and also to all of those in various geo-political regions around the globe that may be suffering at the hands of tyranny, starvation or war.  There's a lot out there to think about.

In the meantime, there's always a few stocks and stories to keep an eye on, and some updates on those which we follow - here's just a few of them...

Newsmakers:  Some big companies, such as Apple (AAPL), General Electric (GE) and Google (GOOG) made headlines last week - and could still this week - due to their respective share price declines during the latest market dip and for their potential to quickly rebound once the market turns around, while others were making the news for having to pay out huge sums of cash to settle ongoing drama.  JP Morgan Chase (JPM) and Credit Suisse, for instance, agreed last week to pay a combined near-$500 million in fines to settle a case with the SEC over mortgage securities packaged and sold prior to the crash of 2008/09.  The deal was announced without either firm admitting guilt, but JPM shares fell to below forty bucks again for the first time since mid-September, although that drop could more be attributed to the down market. 

Also in the banking sector, Citigroup (C) agreed to pay $360 million to the brokerage estate of Lehman Brothers over a dispute relating to the Lehman bankruptcy in 2008.  Citi also announced early this week that it plans to cut 300 sales and trading jobs over the course of the next year in an effort to streamline its banking operations. 

Any resulting dips in these big players could attract new investor interest, but I'm still a fan of the Financial Sector SPDR ETF (XLF).  Barring any 'no brainer' individual deals - like Citi was at a buck (pre-split) XLF generally trades in line with sector volatility and expectations.

In another big payout announced last week, BP (BP) agreed to pay $4.5 billion in fines related to the Deepwater Horizon oil rig disaster of a few years ago.  Shares of the oil and gas giant were largely unaffected by the amount the company will have to pay out, as it has five years to pay in full and BP made well over twenty billion in profits last year - so as rough as it is to mouth this line, $4.5 billion is relative chump change compared to the profits expected to roll in for the duration of the payback.  While the settlement of this ongoing drama will also settle the minds of investors who were awaiting final word, some will still have concerns because other litigation is ongoing and could cost BP a few billion more before it's all said and done.

Those companies mentioned above were - and still could be - some of the biggest news makers for the month of November so far, Hostess Brands may take the cake.  For anyone not be keeping store at home, Hostess is heading for bankruptcy after a deal with the unions fell through and the company can no longer be viable.  As a result, panic quickly spread that a staple of just about every childhood - the Twinkie - is going to disappear, along with other Hostess brands like the Ho-Ho and Wonder Bread.  In a demonstration of just how weak the overall media has become in America, the morning shows and the news outlets fueled the hysteria with headlines of how we've seen the last of the Twinkie.  Nothing better to report, I guess.  As a result, consumers were flocking to their local supermarkets to stock up on Hostess products with visions of grandeur about banking sales of $1000-plus for everyone's favorite diabetes-bomb.

C'mon now.  Does anyone really believe that we've seen the last of the Twinkie? 

That story easily takes the cake as the 'weakest news of the week', along with Mike Lupica 'shooting from the peanut gallery' with his jabs at General Petraeus from the front pages of the New York Daily News on Monday.  Didn't that guy used to be a sports writer? 

Earnings: 

Wal-Mart Stores (WMT):  Retailers gained momentum last week when Abercrombie & Fitch (ANFand Home Depot (HD) 'beat the street' while others like Saks (SKS) and  Michael Kors Holdings (KORS) were well in line with expectations, but Wal-Mart - generally regarded as a stalworth of the sector - could not join the party.  Although sales and revenues were up for the most recently-completed quarter, profit margins were down since the company offered steep discounts throughout the quarter to attract shoppers.  Additionally, the company guided lower for the current quarter, noting that the discounts would continue (and maybe even go lower) in order to keep store traffic flowing.  Such actions will kill profit margins even more, but could retain the consumer traffic necessary to spark and eventual earnings rebound.  While the likes of ANF were jumping by thirty percent, WMT shares dove by four percent on the revised guidance.  There's little doubt that Wal-Mart could rebound, as the third quarter did mark a turnaround in a trend that saw revenue declining for nine consecutive quarters, but the company is also slated to deal with some legal and union drama, too, coming up, which may make some investors nervous.

Oncothyreon (ONTY):  Oncothyreon posted its third quarters earnings report last week, but like most developmental companies in the health care sector with key trial catalysts pending, investors were more concerned with updates on pipeline development than they were with the actual earnings numbers - especially since such companies have no earnings to report, only losses. 

As a side note, that is not to say that the numbers should not be looked at.  Investors can use the numbers to gauge management's ability to control losses and spend money wisely as the pipeline develops.  A bad management team can nullify a product with great potential simply by digging too big a financial hole from which to dig out of, or mismanaging assets enough to lose the company credibility in the eyes of investors and bigger players in the sector.

For investors of Oncothyreon, Stimuvax is key.  The cancer immunotherapeutic treatment is being tested by Merck KGaA for the treatment of non-small cell lung cancer and results are expected to be released in the first quarter of next year, in line with the most recent expectations.  Shares did take a sharp dive earlier this year, however, when the company initially re-set expectations for trial results to 1Q 2013 from 4Q this year, as many investors took that as a sign of uncertainty surrounding the effectiveness of Stimuvax.  Those thoughts were expounded when an independent monitoring committee did not halt trials early based on positive results.  Comments at the time from the CEO insisted that expectations of an early trial halt were unrealistic and that it should be viewed as a positive that the trials continued following the audit. 

With first quarter well within sights, ONTY will start gaining more attention.  Dendreon (DNDN) is a prime example of the moves a stock can make following positive results from a cancer immunotherapy trial, and that will entice a fair amount of speculative investors leading into this catalyst, but it's also worth noting that Dendreon's Provenge failed to catch on as quickly and monumentally as expected, so expectations may be tempered for immunotherapies this go-round.

Although the overall market slide played some role in the drop, ONTY's share price declined to the mid-$4 range last week following the earnings report.

Organovo Holdings (ONVO):  Organovo also reported earnings last week and has been gaining attention in the 3D printing and regenerative medicine sectors, two potentially very lucrative sectors.  The company's NovoGen MMX Bioprinter uses live human cell samples to generate 3D "bioprints" of human tissue.  Once generated, these 3D prints can be used as disease models that enable therapeutic drug research, discovery and development and - further on down the road - could potentially be used in generating organs for patients awaiting transplants.

Still considered a developmental company, investors - as with Oncothyreon - were more concerned with company updates regarding its Bioprinter than with the earnings numbers themselves, although the company did post a one hundred percent increase in revenue this year over the same period of the year prior thanks to grant money and revenue generated from research agreements.  Aside from the National Institutes of Health, Organovo also has deals with Pfizer (PFE) and United Therapeutics (UTHR) that have already generated over a million dollars in cash, in total, and both have the potential to turn into something more lucrative - with key focus on the Pfizer deal since it is scheduled to expire at the end of this year. 

Also during the quarter, Organovo received two key patents and re-located to a new research facility in San Diego that tripled its laboratory space. 

Zacks.com initiated coverage of the company earlier this year with a rating of 'Outperform' and a price target of $3.25, based on the progress made thus far and on the business plan moving forward.  The price target materialized fairly quickly, with ONVO reaching nearly $3.40 at one point last month before retreating back towards two, while last week's quarterly report indicates that the company is positioning itself to more aggressively push its 3D bioprinting technology into the field of regenerative medicine.

Shares slipped further towards two as the week progressed.

Other earnings stories to watch during the coming week will be Lowe's Companies (LOW) - especially following Home Depot's enthusiastic report last week; Best Buy (BBY), to see if it, too, can take advantage of a rebound in consumer confidence; and Chipotle (CMG), to see if this one will follow the trend of McDonald's (MCD) sub par earnings report earlier in the quarter or Yum Brands (YUM) enthusiastic report.  Investors will be eyeballing CMG to gauge whether or not it's a safe buy-in, but many consider BBY as having hung on by a thread for too long, so disappointing numbers could lead to a significant drop.

Implant Sciences (IMSC):  All attention these days for Implant Sciences revolves around the advancement of the company's Quantum Sniffer (QS) explosives trace detection (ETD) technology through the TSA certification process while also boosting international sales in high-threat areas.  A couple of new international deals were announced last week, underlining the potential for future growth with or without the TSA qualification, and highlighting the versatility of the QS technology as threats of terror increase around the globe, while progress was made on the earnings front, too.  In last week's quarterly earnings report, revenue for the reported quarter was 37% higher than the same quarter of the previous year.

The most pressing milestone that could go a long way towards solidifying the long case for Implant Sciences, however, would be the validation by the Transportation Security Laboratory's of the B220, which is being positioned for potential use in air cargo screening. Pending validation, which is still expected to come soon, according to comments made by company officials over the past couple of weeks, Implant will look to capitalize on the key December 3rd deadline imposed by the TSA stating that all inbound-US air cargo on passenger airliners will be screened for explosive traces. 

Being in the "ramp up" stage of development and growth, investors will be keeping a keen eye on future earnings numbers, especially if the TSA certification comes through in the short term.

Healthcare, Biotech, Pharmaceutical:

Amarin Corporation (AMRN):  Amarin shares were all over the place last week.  Following an overseas rumor last month identifying AstraZeneca (AZN) as a potential buyer of Amarin, reports surfaced last week, too, that that Teva Pharmaceuticals (TEV) is interested.  Shares spiked roughly a buck on that news before they retreated later in the week as another FDA delay regarding Vascepa's New Chemical Entity (NCE) kept some investors edgy.  While the NCE status is not a show-stopper for a commercial launch, nor a show-stopper for a potential partnership or acquisition deal, it holds enough weight over Vascepa's future to put everything on hold until an outcome is known.  With that said, it's crunch time for Amarin to decide whether to take any deal that may be on the table now from a potential buyer, launch the product on its own or continue to wait on the FDA.  The company has previously noted that Vascepa would be launched in the first quarter of 2013, so any more waiting may either postpone that date or cause enough concern for investors that some may begin to sell - for those that haven't already - so waiting may not be the best option.  With holiday season upon us, government agencies are primed to become even more ineffective and unproductive than they already are, so really who knows when a decision will be forthcoming on the NCE. 

In the end, whether Amarin decides to start hiring a sales force now or not, it's likely - in my opinion - that the eventual outcome will be a buyout.  I'm not keen on making price projections or best guesses because the markets are so fluid and move just as much on hype and manipulation as they do on actualities, but I'll venture to say that a deal in the range of $22 is a reasonable estimate for valuation per share, with recent market action, previous expectations and the overall potential of Vascepa forming the basis of that opinion.  Give a few bucks should an NCE decision finally be forthcoming and take a few as worst-case.

Expect a dip, however, if the company goes it alone in the meantime.

Synergy Pharmaceuticals (SGYP):  Synergy Pharmaceuticals has made quite a bit of noise lately with a swift drop from near the five dollar mark to just over three, but as mentioned during the dive, those depressed prices may attract some significant buyers with the pending Plecanatide trial catalyst due during the first week of January.  Some reasoning behind that thought process revolved around the recent announcement of a merger with Callisto Pharmaceuticals (CLSP), given that Callisto held a forty-percent position in SGYP previous to the deal and the merger would eliminate that roadblock to attracting new interest.

Synergy did end up attracting a pretty significant buy during that drop, notably from an insider as Chairman Gabriele Cerrone jumped in at right around the $3.60 mark.  The buy took place right in the middle of SGYP's rapid recover, as shares moved from a low of $3.05 to a high of $4.40 in just four trading days. 
It's also worth noting that volume for the upswing was higher than that of the downturn, indicating buyers took advantage of the drop.

Canaccord also initiated coverage with a 'Buy' rating and a price target of seven bucks earlier in the month, a move that also may have boosted investor confidence.  Plecanatide results can now be measured in weeks, not just month, so SGYP could receive its fair share of attention through the holiday season.

Roundup:  If the positive mood surrounding fiscal cliff negotiations continues in Washington, then it could be a solid week heading into the holiday season.  It also wouldn't hurt if the retailers continue a positive trend and post surprisingly-good Black Friday and Cyber Monday sales numbers, but at the same time America needs to get a hold of itself because the holidays have become so commercialized that the spirit of the season is at threat of becoming completely lost.  Turkey day should be about family, friends and thanks, but it's becoming more about rushing through the food to go stand in line for a good deal - that probably isn't that good a deal anyway.  Christmas trees up in early November?  C'mon now.  We're getting a bit ridiculous.  If only those in the trouble spots around the globe had just the 'horrors' of long lines at Toys R Us to worry about.

Also look this week towards Europe as Greece receiving its next round of bailout cash is imperative to its survival while other leaders standing strong on austerity measures - and not caving into the tens of thousands of protesters on the continent - will ease investor concerns about the future viability of the euro.  Barring any worsening geo-political scenarios in the Middle East, most attention will be paid to US economic negotiations, and those look pretty good right now.

Happy Trading and Happy Thanksgiving!!!  Remember what's important.

Disclosure:  Long AMRN, IMSC, SGYP.

Contact VFC's Stock House: vfc@vfcsstockhouse.com

Originally published at: http://vfcsstockhouse.com

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Sunday, November 18, 2012

Stock Watch Thursday, 15 November: ANF, CSCO, MRIC, SGYP, FB, SBUX, TEA, DIS, LPTN, PFE

Stocks continued their recent slide on Wednesday as negotiations over the pending 'fiscal cliff' in the United States took center stage when US President Barack Obama indicated that he would be unwilling to waver when it came to imposing tax increases on the wealthiest Americans.  Republicans in the House have also indicated that their position of no tax hikes without significant budget cuts is also unwavering, setting the tone for what could be a very tense and politically bloody period of discussions. 

Tensions also flared in various flash points around the globe, which only added to the bearish investor mood and sparked a sell-off that intensified as the trading day progressed.  Europe has been riddled with mass protests and strikes by citizens unhappy with the drastic measures of austerity having to be implemented due to sputtering economies over there and new violence in the Middle East also has investors nervous.

None of these issues look as if they will subside any time soon and a compromise over the pending fiscal cliff in the US also doesn't look like it'll materialize over the near term, so it's safe to assume that we could be in for a fickle and bearish market until investors see some resolution on the fiscal cliff, at which point a rebound rally could be in store.

There were some bright spots note as the market drops, though, and here's a few updates on some stocks and stories that we've been keeping an eye on...

Earnings:

Abercrombie & Fitch (ANF):  Abercrombie shares jumped by well over thirty percent on Wednesday as the broad market dropped following an encouraging earnings report that beat the street's expectations with higher profit margins.  The company also guided higher for the remainder of 2012 - and for 2013, too -underlining the positive trend in the retail sector that was noted with other earnings reports earlier in the week and reaffirmed the positive trends in consumer sentiment noted in the days before the presidential election.  The positive quarter has ANF shares trading at levels not seen since the pre-summer months and offers another hint of validation that the US economy is methodically becoming stronger since it's proof that consumers are willing to spend.  With the overall bearish investor sentiment, however, it could be wise to expect some profit taking into moves such as this one, especially with some investors becoming increasingly concerned with the prospects of capital gains tax heights being implemented next year.

Cisco Systems (CSCO):  Cisco was another earnings winner on Wednesday as shares jumped on heavy volume after the company reported on Tuesday evening some nice increases in profits and revenues for the most recently-completed quarter.  The company also provided more upbeat guidance than expected moving forward, compelling at least one analyst to upgrade its opinion on the stock.  Cisco's report provided a modest boost for others in the tech sector, too, and joined in what could be viewed as one of the better weeks of the current earnings quarter, after a slew of disappointments dominated the early-season headlines.

MRI Interventions (MRIC):  Lately MRI Interventions has attracted increased investor interest due to the company's efforts to increase its sales force and more heavily market the ClearPoint and ClearTrace MRI-enhancing systems that provide medical professionals with real-time imagery during complicated procedures on the brain and heart, respectively.  A Monday announcement sparked a twenty percent price gain this week already, but it was the company's Wednesday earnings report that again sparked another price move, this one a bit more modest, and confirmed the positive trends registered by MRIC already this year.  Revenue from the "disposable items" related to ClearPoint procedures increased by 40% on a quarter-over-quarter basis, an encouraging note, given that investors have keyed in on the company's ability to bank continuing revenue from units sold, aside from just the unit itself.  Sales of such items were up 265% over the nine month period this year when compared to the same period of last year. 

As the sales force continues to expand, investors will be watching for the continued growth demonstrated by this latest report to help offset - or at least lessen - any concerns of future financing that could be dilutive to investors.  Currently, MRIC is set with enough cash to last well into 2013, according to the terms of the latest stock offering, and recent events have continued to attract new investor interest.

Synergy Pharmaceuticals (SGYP):  Investors have monitored shares of Synergy Pharmaceuticals over the past few weeks as they plunged back towards the three dollar mark following months of hovering near five.  Considering the upcoming trial catalysts, however, it was also noted during the slide that SGYP could turn into a pretty quick rebound play.  Following an earnings report that was more about providing an update for Plecanatide than it was about the numbers, shares spiked by twenty percent during Wednesday's trading session and indicated positive investor sentiment leading into the expected late-year 2012/early-year 2013 catalysts.  Plecanatide is the company's flagship product and Phase IIb/III results are expected to be released in early January - according to comments contained within this week's quarterly report - for its treatment of chronic idiopathic constipation.  Previous expectations had those results out by the end of December, but you know how it goes during the holiday season. 

The company also noted that it is preparing to commence another Plecanatide trial for the treatment of irritable bowel syndrome with constipation, offering an additional market for Synergy to penetrate as it ramps up its efforts to become a major player in the GI field.

As a result of the updates contained in this week's report, Canaccord reiterated its 'Buy' rating on Synergy shares and maintained a price target of $7.  Additionally, a recently-announced merger with Callisto Pharmaceuticals (CLSP) was intended to help attract institutional interest and this week's volume boost may be an indication that the plan is starting to bear fruits.

Newsmakers:

Facebook (FB):  It's been widely assumed that shares of Facebook would be positioned to plunge - as they have in the past - when key lock-up periods related to the early-year IPO expire, but FB bucked that trend on Wednesday and jumped by a full twelve percent as about 800 million more shares became available for trading.  Some investors are viewing Wednesday's price spike as evidence that those investors holding the newly-available shares are hanging onto those shares and not selling.  Such moves will spark confidence with existing investors and could also potentially attract some of those would-be investors who were sitting on the sidelines taking a 'wait and see' approach - hence the twelve percent move to the upside. 

In truth, however, one trading day may not be enough to judge the true intent of those holding the expiring shares.  While Facebook reinvigorated investor enthusiasm following its most recent earnings report that demonstrated growth in the global market, the overall bearish sentiment of the broad market cannot be ignored, no matter how much of a decent by FB may look to some.  Additionally, there are still concerns by many - as mentioned above - that capital gains taxes are slated for an increase next year- and that is a fact that also cannot be ignored right now.  In short, the headlines out there yesterday and today are giddy with enthusiasm that those holding the newly-available shares are not selling, but the real truth may be that they're not selling yet

Small investors may just be getting a story right now painted just as the big boys want them to see it.  One day does not set a trend, so I'd continue to look at this one with a skeptical eye, especially in this market.

Starbucks (SBUX):  Starbucks is flying high right now.  An encouraging earnings report earlier this month halted what was a modest share price slide and the company's move into the single serving market looks to be gaining momentum.  Then, on Wednesday, the company announced plans to acquire Teavana Holdings (TEA) and expand into the tea market, too.  Shares of TEA jumped by over fifty percent on the news to fall more in line with the valuation of the deal, which was announced as being valued at $620 million.  Starbucks shares, on the other hand, dipped about three percentage points, although few view this as a bad move for the company.

Given Starbucks' success in growing its coffee brand over the years, investors are equally optimistic that it could grow the tea brand, as well.  Using the same growth strategy, CEO Howard Schultz noted that it will utilize Teavana's existing locations to open 'tea bars', as it has with coffee, while also opening new sit-down stores both in the US and abroad. 

This deal has been received well by the markets, and rightfully so.  Starbucks is simply expanding its brand and its reach, similar to what Walt Disney Co. (DIS) was doing when it purchased Marvel and Star Wars in the entertainment sector.

Healthcare, Biotech, Pharmaceutical:

Lpath, Inc. (LPTN):  Lpath is already a recognized leader in the field of lipid-based therapeutics and its ImmuneY2 technology is being developed to target various ailments, including Wed AMD and cancer.  The company also landed an early partnership for its technology with Pfizer (PFE), positioning itself well ahead of the game, when compared to other developing companies at similar stages of development.  It's been an up-and-down year in 2012, however, as it began with a temporary trial halt related to issues with the company's finish/fill contractor and were not related to the safety and efficacy of its own product, iSONEP, in the ongoing PEDigree and Nexus trials.

Since that time, Lpath has found a work-around and resumed the Nexus trial, but - according to the most recent quarterly report - has "deprioritized" the PEDigree trial due to ongoing negotiations with Pfizer in relation to the costs of continuing both trials.  Due to the trial halt earlier in the year, and subsequent re-starting of of the Nexus trial, associated costs have risen enough to where the partners are collaborating to offset those increased costs.  That collaboration, as noted, has led to the continuation of the larger trial.
Investors should not be too concerned regarding the re-start of only one trial, as the move was made in conjunction with Pfizer - whose early interest in the technology validates its potential and could also hint at continued partnerships or buyout offers.  Pfizer also holds a 'first right of refusal' for a partnership regarding Lpath's ASONEP line, too.

Additionally, in a move to bolster its attractiveness in the eyes of more serious investors, Lpath last month conducted a reverse stock split in conjunction with a move to the Nasdaq. In general, reverse stock splits are hardly kind to companies forced to undertake them, but since LPTN was dealing from a position of strength, shares have hardly suffered.

Roundup:  News circulated on early Thursday that the Euro Zone is slipping back into recession, a development that could kill any encouraging hopes of a broad market rebound for the time being.  Although the bearish market is likely to remain bearish for the foreseeable future, opportunities to find bargains and overly-depressed stocks will emerge, making it a key ideal to maintian some spare cash on the sidelines.  Also because of the bearish sentiment and growing volatility surrounding fiscal cliff negotiations, quick price spikes may more often than not be followed by even quicker retreats.  It's always a good idea, in my opinion, to bank some profits with trading shares into any run, even while holding onto a core group of shares to play for the long term, and such a strategy may be even more important in today's environment.

It's easy to become discouraged when the markets head south, but for those with the time and patience, the deals and steals could abound - keep an eye out for them.

Happy Trading!!!

Disclosure:  Long SGYP.

Contact VFC's Stock House: vfc@vfcsstockhouse.com

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Friday, November 16, 2012

Tuesday Recap: MRIC, BSX, SI, HD, ABT, GILD, IMSC

Investor caution could dominate mid-week trading as debates over the pending 'fiscal cliff' in the United States intensify as European leaders across the Atlantic decide to pay for another round of bailout financing to ward off a Greek bankruptcy.  The Greek government ignored the molotov cocktails and angry protesters last week to come up with additional measures of austerity - the first step towards securing this additional round of bailout money - and European fiscal representatives granted the country another two years to get its fiscal act together, but concerns of how these bailouts will be paid for transparent to European taxpayers will still weigh heavily on the markets. 

European shares suffered as a result on Tuesday, as did the Euro, which hit multi-month lows.

Any talk of European or international fiscal entities leaving the Greeks to fend for themselves is slim at this point, so the markets may take any concerns of a return to the drachma with a grain of salt, given that the bailout money has already started to flow into the country and it doesn't look like the tap is going to be shut off.  That said, if the rest of Europe gets tired of bearing the brunt of Greece's woes and uncertainty again creeps into the markets, all bets may be off.
For now, however, most investor attention in the US will likely be paid to the looming fiscal cliff and the stark divide between Washington's politicians on how to get a deal done...and then there's also a fair share of scandal and drama hitting the wires by the minutes, for those that enjoy such sideshows.

In the meantime, here's a few updates for some stocks and stories that we've been keeping an eye on...

Earnings:

Home Depot (HD):  This week is slated to be a retailer-heavy week for earnings report and Home Depot marked an early win with a report that beat the street.  The win, according to numerous media outlets, could largely be attributed to a rebound in the housing market and - although not your typical "retailer" - could also speak towards the uptick in consumer confidence noted earlier this month before the elections.  Sales and net earnings both increased from the same quarter of the previous year and beat both internal and external estimates.  Shares were up by two percent during early trading on Tuesday and could set the tone for an optimistic week in the earnings department. 

Retailers:  Saks (SKS), on the other hand, reported earnings generally in-line with estimates, but guided lower for the remainder of the year citing Hurricane Sandy as a cause for concern.  Revenue came in slightly below estimates, but not enough to disappoint to the levels of other major misses of the quarter.  Michael Kors Holdings (KORS) and Dick's Sporting Goods (DKS) did modestly beat the street, however, reaffirming the potential positive trends in the retail sector leading into the holiday shopping season.
Newsmakers:

Gilead Sciences (GILD):  Shares of Gilead were on the fly Monday and early Tuesday on strong volume after the company reported positive resutls for its hep C treatment, composed of a combination of drugs.  According to the study results, the combination "rendered hepatitis C undetectable after four weeks after completing 12 weeks of therapy."  The GILD price movement spiked shares to record levels and highlighted investor enthusiasm towards new treatments for Hep C being developed.  Abbott Laboratories (ABT) is developing a similar treatment, but this round goes to Gilead.  With a price spike like that in a bum market, GILD is a story to watch.

Microsoft Corporation (MSFT):  Shares of Microsoft were trading lower during early trading on Tuesday after the surprise announcement that Steven Sinofsky, the potential heir to the CEO position, left the company on Monday evening.  Little is known for the reason at this time, but nervous investors took to selling early on Tuesday.  Microsoft has been making news as its new tablet has been gaining quick market share while Windows 8 hits the market, too.  The Sinofsky departure will likely turn out to just be a hiccup, but it's a story to watch since investors don't like uncertainty.

Healthcare, Biotech, Pharmaceutical:

MRI Interventions (MRIC):  As previously discussed, MRI Interventions 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.  Through partnerships with Siemens AG (SI), Boston Scientific Corporation (BSX) and Brainlab, the company has managed to push this technology into numerous markets in the US and recently made a move into Europe, too.

A key development that investors have been concentrating on recently is the revenue that the company can generate from "disposable items" relating to the procedures involving the ClearPoint or ClearTrace units, in addition to the revenue generated by sales of the units themselves.  As discussed during previous weeks, MRIC has been able to note impressive revenue gains in relation to those 'disposable items,' providing a notable avenue for growth moving forward.

In addition to that note, however, company officials have also emphasized the importance of transitioning into a new stage of growth, as noted in a recent interview.  The new push for more robust growth will revolve around the boosting a minimally-manned sales force with additional personnel in order to expand the awareness and market penetration of the ClearPoint and ClearTrace technologies.  In keeping with that strategy, the company announced this week the appointment of Robert C. Korn as the head of its new global sales and marketing efforts.  Mr. Korn had previously served as Regional Sales Director for Medtronic Surgical Technologies and brings to MRI the experience and contacts necessary to validate the next stage of growth.

MRIC shares responded to the news with a nearly twenty percent price spike on Monday and erased the losses of last week's close.  Investors will look to the next few quarters for evidence that the boosted sales force is bringing returns that could soften the blow of any future financing deals.  Currently, MRIC is set with enough cash to last well into 2013, according to the terms of the latest stock offering.

Mr. Korn joins two other recent additions to the sales team, indicating that MRIC is backing up words with action - always something investors look for from a management team.

Explosive Trace Detection (ETD) / Global Defense:

Implant Sciences (IMSC):  Implant received quite a bit of attention last week following its questionable move lower and quick rebound to close the week, but all investor attention is still being concentrated towards the ongoing TSA certification process that could open the doors for numerous government contracts in relation to airline and air cargo security.  It should also be noted, however, that while awaiting the final TSA news, the company has demonstrated that there are multiple avenues from which the company could secure global revenue.  Earlier this year the Quantum Sniffer technology was put to use in Cartagena, Colombia to provide security at the 'Summit of the Americas,' and then just months ago the technology was emphasized in other high-threat market, such as Nigeria.

This week additional evidence of the global need for Sniffer technology was on display.

On Monday Implant secured another defense contract in the Middle East, with the sale being made by a Bahrain-based contractor.  This particular contractor has registered sales from multiple countries in the region, which should be noteworthy because although Syria and Libya are garnering all the attention from the media right now, consistent threats of here-and-there explosive attacks are becoming increasingly prevalent around the region.  In fact, recent news reports have indicated that Bahrain has called up its national guard to assist the police in dealing with these threats, making Monday's announcement by a Bahrain-based company that much more notable.

Following that news, it was announced on Tuesday morning that another order was placed from an un-named Asian nation to bolster its secret service force.  While TSA still remains the holy grail in the eyes of the investing community, the Quantum Sniffer technology continues to demonstrate its versatility around the globe.  Still a hot story to watch right now, considering that the TSA approval should be considered as much a milestone to this company as a drug approval by the FDA for a still-developing small pharma or biotech.

Roundup:  The Greece situation looks to be somewhat settled for the time being, so it's back to worrying about the economic impact that a fiscal cliff would have on the US economy.  As discussed this weekend, it's more likely than not that a deal will be reached, in my opinion, if only because each side will want to claim some sort of victory, but things could get ugly in the meantime.  As usual, look for volatility to dominate trading for the remainder of the year. 

Shares were trading relatively flat Tuesday morning.

Happy Trading!!!

Disclosure:  Long IMSC.

Contact VFC's Stock House: vfc@vfcsstockhouse.com

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Thursday, November 15, 2012

Weekly Stock Watch, Week of 12 November: AAPL, AOL, JCP, WMT, DLTR, TGT, SKS, AMRN, SPPI, TEV, SGNT, ALTH, CPST, SSH, HTWR, THOR, IMSC, SGYP, IRWD, CLSP, TTNP, SIRI, LMCA, MRIC, BSX, SI, FB, ONTY

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. 

With the election season now behind us and the prospects of a 'fiscal cliff' facing the US economy, concentration this week will be focused on whether or not last week's broad market drop will continue into an all-out market correction, as some have predicted.  The markets started tanking on Wednesday - following the re-election of US President Barack Obama - but to be completely fair to the President, the pullback cannot solely be attributed to investor reaction to the election results - there were many other factors at play last week that likely led to the market drop.

Most significantly, evidence started rolling in from across the Atlantic at the mid-week mark indicating that the European economy may be in for another recession.  That news - coupled with a general lack of confidence from US investors that the 'status-quo' American government would be able to come to an agreement and keep the fiscal cliff at bay - likely played as the lead culprits behind last week's bearish moves.

Additionally, Greece remained in the spotlight as government officials voted on new austerity measures in order to keep EU bailout money flowing.  Without a new influx of cash, Greece could be looking at a state of bankruptcy as early as later this week.  That, too, has the attention of global investors.  Still worrisome is the fact that Greece may still have a long way to go in terms of austerity, especially with the economy predicted to shrink by another 4.5% in 2013. 

Although Washington continues to look as gridlocked as ever, it's likely that the politicians see the need to come to a consensus regarding the cliff sooner, rather than later, since the very state of the US economy may hang in the balance.  Pundits predict that the tax increases and spending cuts that would be invoked by the cliff would spiral the US into another recession, far from the desired outcome of any political party.  Whether it's another postponement or an all-out agreement, it's probably safe to assume that something will get done.

On that note, it's also about time for an approved budget, too.

While much of last week's drop could be attributed to international fiscal developments, as described above, there are also some direct bearish correlations to the election results.  For instance, many investors predict that capital gains taxes will spike during the President's second term, compelling some of them to sell.  That trend could continue into the new trading week and beyond.

Investors are also alarmed of the rapid sell-off of Apple (AAPL) shares, which dropped by another five percent-plus last week, and the ongoing earnings season continues to disappoint.

With all that said, there are encouraging bullish signs for investors to ponder this week.  Consumer sentiment stands at a multi-year high and economic indicators were ticking upwards leading into last Tuesday's election.  Any continued momentum on those fronts could support the markets enough to stay afloat until (if) the politicians in Washington put aside their egos and personalities and come to an agreement regarding the pending fiscal issues.

Undoubtedly, there's plenty to watch this week and it's probably a good idea to have some cash sitting on the sidelines just in case the markets continue to drop and some nice buying opportunities open up.

In the meantime, there's always a few stocks and stories to keep an eye on - here's just a few of them...

Earnings:

Earnings reports over the past week were essentially thrown to the back burner as hype surrounding the political elections and economic news from overseas dominated the headlines, but there were still a couple of key stories to note.  AOL (AOL), for example, demonstrated that it may be in the midst of a turnaround as revenues from online advertising sales proved on the uptick while J.C. Penny (JCP), on the other hand, showed that the company is having a tough time re-inventing itself after the economic turmoil of the past few years killed the company's profit margins.  Both are worthwhile stories to watch as potential rebound plays, but it's also worth noting that both are operating in very competitive sectors and still have a tough road ahead.

This week's earnings reports will be retailer-heavy.  Although J.C. Penney's report has expectations tempered for the sector, some surprises may be in store, given the recent positive notes regarding consumer sentiment, as mentioned above.  If consumers are, in fact, confident about throwing their dollars around, look no further than Wal-Mart (WMT), Dollar Tree (DLTR), Target (TGT), Saks (SKS) and others that are all set to report this week for positive trends leading into the holiday season.  Enthusiastic results from some of those big boys may be enough to lift the holiday spirits of the markets, too, especially if there is progress on the political front in regards to sorting out the fiscal cliff.

Other earnings-related notes:

Amarin Corporation (AMRN):   Amarin's report and conference call last week was not expected to be about the numbers, rather investors were looking to key in on any updates that could be had in relation to the Vascepa launch, still expected for 1Q 2013.  Many investor concerns relating to the launch were addressed by company officials - although there is still no definitive word on a buyout, partnership or go-it-alone - and shares responded accordingly, jumping by nearly ten percent on Friday on volume slightly above average.

The key takeaway from the conference call is that nothing has really changed from previous expectations - it's a 'hurry up and wait' game for investors.  Vascepa's New Chemical Entity (NCE) status is still an issue for Amarin and potential buyers/partners, as discussed in the call, although company officials feel confident that the amount of patent protection awarded Vascepa can stave off any legal challenges, with or without NCE.  Officials also noted that a Vascepa sales force will be in place later this month, should no buyout or partnership materialize sooner, to ensure a smooth commercial launch next year in the event the company needs to follow its go-it-alone plan of action.  Discussions, however, with big pharma are still ongoing and being finalized, according to the report. 

Also of significance from the report is that a final NCE decision looks to be imminent, according to ongoing correspondence with the FDA.

It's crunch time now for Amarin following last week's call.  If Friday's spike is any indication, investors voted with a boost of confidence in regards to the company's plan of execution. 

Still a hot one to watch.  Look for final resolution on the buyout story - one way or another - after the NCE status is known.

Spectrum Pharmaceuticals (SPPI):  As noted last week, Spectrum was another hot earnings story to watch.  Shares had been on the decline as many investors and popular financial media outlets continued to predict growing competition for FUSILEV from generic providers such as Teva (TEV) and Sagent Pharmaceuticals (SGNT).  SPPI shares flew last week, though, following an earnings report that beat analyst estimates and offered more encouraging revised guidance for the full year 2012.  Revenue of $69 million came in ahead of analyst expectations of $65 million, a 35% increase over the same quarter of the previous year, and full year guidance was revised to indicate expectations of the company "exceeding" the $300 million mark, where before expectations were floated as coming in at "around" that mark.  Spectrum also received a boost from its newest product, FOLOTYN, recently-added to the portfolio through an acquisition of Allos Therapeutics (ALTH), and the company also cited resulting savings from synergies from the deal that help reduce expenditures.  All in all, it was a decent report from the company for the latest quarter and investors immediately responded with the price push back towards twelve.

On the other hand, concerns will still be aired regarding the threat of increased generic competition.  Product sales were up significantly when compared to the same quarter of the previous year, but not so much on a quarter-over-quarter basis.  These arguments may help to enable a still-high short interest (sixty percent of the float) to weigh heavily on the stock and potentially limit the upside for the time being, especially if the overall market is depressed. 

In favor of the long case for Spectrum, however, FUSILEV continues to penetrate the market while fending off generic concerns and the company still has a deep pipeline that supports a solid foundation for future growth.  Sales forecasts are growing and the company trades with a relatively modest market cap in relation to those forecasts.  The previously-announced "strategic" reshaping of the US-based sales force should also help with consolidation and cost savings, building a strong bullish outlook moving forward.

Assuming continued penetration into the market by Spectrum's main drugs, SPPI could be viewed as a nice 'buy the dips' play right now, but investors should also keep the high short interest in mind - especially while the overall market is preaching a bearish tone.

Capstone Turbine (CPST):  Shares of Capstone enjoyed a high-volumed push to over the dollar mark early last week leading into the company's Thursday afternoon earnings report, but they quickly fell below a buck again as the broad market dropped and revenue numbers for the quarter came in below expectations.  Encouraging signs were prevalent, however, as the company recorded the fifth straight quarter of expanding margins and, as noted by the Capstone President and Chief Executive Officer in a conference call, record backlog was achieved for the third consecutive quarter while revenue has increased four quarters in a row.
Capstone also has a strong cash balance of over $45 million on the books to go along with the increasing sales and backlog numbers, but the key remains to convince investors that profitability is well within reach.  Some investors remain unconvinced, as evidenced by the stock's fall from over two dollars early last year to under a buck.

Playing on a shift towards greener energy and the low price of natural gas, Capstone's low-emission microturbines should continue to penetrate the energy market.  That could lead to a continuation of the current sales and backlog trends and keep investors highly interested, but as long as the markets are sputtering, it could, too, be a bumpy ride for CPST.

Historically speaking, however, purchases of this stock in the dollar range have been handsomely rewarded with speculative spikes to the $1.50-$2 range.  Worth keeping an eye on.

Sunshine Heart (SSH):  Sunshine Heart also reported earnings last week, but like Amarin, investors were more interested in updates and pending milestones than they were with the numbers.  Earlier this year, Sunshine achieved a notable benchmark when its C-Pulse Heart Assist system was approved in Europe for the treatment of Class III heart failure.  C-Pulse is an implantable device considered much less invasive than other implantable devices on the market - from Heartware International (HTWR) and Thoratec (THOR), for example - given that the C-Pulse is implanted outside of a patient's bloodstream.  Additionally, Sunshine has relatively no competition for its device, given its target patient set of Class III patients.

The company used its third quarter report to recap the milestones met during the previous three months, including the European approval, the IDE approval by the FDA that clears the way for the initiation of a US trial during the current quarter and the positive trends noted in the results of the already-completed feasibility trial.  Sunshine also reiterated its planned milestones for the fourth quarter, including the launch of the US trial and the commercial launch of C-Pulse in Europe.  With prospects of the company starting to realize revenue in Europe as early as this quarter, and with the meeting of expected milestones on time, multiple analysts have reiterated their positive outlooks on the company following the report.

Northland Capital Markets, for example, maintained its 'outperform' rating on SSH shares with an enthusiastic price target of $20.  Summer Street and Canaccord also reiterated their buy ratings on the stock, sticking with price targets of $26 and $12.50, respectively.

Sunshine also conducted a stock offering during the third quarter, positioning itself with funding expected to last through the mid-way point of the US trial.  A large - and still unnamed - strategic investor came on board with three million dollars during the offering and appointed a member to the board, hinting that potential partners or buyers of the Sunshine technology could already be waiting in the wings, pending additional trial results.

This could conceivably be the last quarter of zero revenue for Sunshine, given the imminent European launch.  A quick rampup in sales should not be expected, however, given the terminology used by the company as a 'controlled release'; that generally means that a company will look to conserve resources while growing a product's awareness through a more 'grass roots' effort. 

Also of note, Sunshine will present at numerous high-profile investor conferences this month, including the Lazard Capital and Credite Suisse Healthcare Conferences.

Explosive Trace Detection (ETD) / Global Defense:

Implant Sciences (IMSC):  The Implant Sciences story will be heavily watched this week following a highly volatile move last week ignited by a bearish Seeking Alpha report that was widely-viewed as sparking a large-volumed, mid-week selloff of IMSC shares.  The quick drop culminated in a low of seventy five cents, but an impromptu conference call set up by management on the heels of the bear raid provided enough momentum that shares closed the week in the range where they had been trading before the SA article was published.  The basis of the bearish report was again financials - a theme that has been often discussed time and again as investors await a final approval determination by the TSA for the QS-B220 explosives and narcotics trace detector.  The DMRJ Group LLC currently holds over $20 million in Implant debt and concerns are often aired by short-minded investors that Implant will be unable to meet its debt obligations.  Some of those concerns were alleviated months ago when DMRJ agreed to extend the terms of the most pressing agreement until the end of March, 2013, providing a full two quarters of development and progress for Implant before having to worry about debt coming due, but the concerns will persist - nonetheless - until the company can consistently demonstrate signs of sustained life.

The most pressing milestone that could go a long way towards solidifying the long case for Implant Sciences is the validation by the Transportation Security Laboratory's of the B220, which is being positioned for potential use in air cargo screening. Pending validation, which is still expected to come soon, according to comments made by company officials in last week's call, Implant will look to capitalize on the key December 3rd deadline imposed by the TSA stating that all inbound-US air cargo on passenger airliners will be screened for explosive traces.  Management continues to remain confident that related contracts will be forthcoming, assuming approval.

Another Seeking Alpha article released last week in the midst of the share price rebound addressed some key points that the bears often miss - notably that Implant stands to not only gain market share in the US due to the potential of its solid, radioactive-free technology, but also because it is the only US manufacturer of explosive and narcotics detection technology.  Those things matter heavily right now as the current political climate screams for manufacturing and jobs in the US.

Bearish arguments will persist until Implant is on solid financial footing - as it is with all still-growing, developmental companies - but the pending potential milestones should still keep investors interested.  While on first glance it look like only the shorts won last week with that high-volumed drop, any longs whose confidence in the potential of this company did not waver during the chaos and took advantage of that drop may have made out with swift thirty percent gains of their own. 

TSA news could be imminent in regards to the B220, making Implant Sciences about as hot a story as ever for those who follow the stock.

Healthcare, Biotech, Pharmaceutical:

Synergy Pharmaceuticals (SGYP):  Synergy Pharmaceuticals was another company whose share price came crashing down last week as the broad markets dropped.  Having traded for close to five bucks just a month ago, SGYP shares closed last week at $3.22 after announcing that the company would push the release of its quarterly report due to difficulties relating to Hurricane Sandy in New York.  As noted last week, however, any slide in SGYP right now may be viewed as an opportunity for those looking to play the very significant late-year catalyst of trial results.  Synergy is still on track to release Phase IIb/III Plecanatide trial in the treatment of chronic idiopathic constipation (CIC) by the end of September and shares could be positioning for a pre-release runup into those results.  Synergy shares initially ran to the five dollar range after Ironwood Pharmaceuticals (IRWD) received approval for Linzess in September. Linzess uses the same mechanism-of-action as Plecanatide and its approval provided validation to the Plecanatide trials in the eyes of investors.

It's also worth noting that part of the reason for Synergy conducting the merger with Callisto Pharmaceuticals (CLSP) was to attract institutional interest, given that Callisto held a forty-percent position in SGYP previous to the deal.  The merger eliminates that roadblock to attracting new interest and it is possible that new interest is looking to now get in before the pending catalysts.  If that's the case, then such parties would be more enticed to buy at these lower levels.  Volume behind Synergy's drop was not alarmingly high, indicating that a broad sell-off is not quite in effect.

Many companies in the sector often enjoy runups before the release of pivotal trial results and SGYP could still be in the game for such a move, as evidenced last week by Canaccord's initiation of coverage with a 'Buy' rating and a price target of seven bucks.  Plecanatide results can now be measured in weeks, not months, positioning the company to receive plenty of investor attention for the remainder of the year.

It's also possible that the SGYP dip could be related to the overall market retreat.  As is generally the case during market corrections and periods of bearish sentiment, speculative money could be the first to get pulled onto the sidelines.  Such was the case during the drop of 2008-09 when highly speculative shares of Titan Pharmaceuticals (TTNP) and SiriusXM (SIRI), for example, traded for a mere penny and nickel, respectively, and it's likely that many other similar opportunities will play out in the speculative sector during the current retreat.

While there are definitely no sure things in the markets, especially during bearish periods, investors are often able to find reduced layers of overall risk with regards to their speculative picks, if only because prices become more depressed than usual as there is less speculative money going around.  In the case of Synergy, the overall potential of the story has not changed, only the share price, so those looking at the speculative potential of Plecanatide and the rest of the pipeline may find themselves with a relative bargain over the next few weeks.

Technology, Products, Services:

Sirius XM Radio Inc. (SIRI):  Although SIRI was still a highly speculative player during the market crash in early 2009 when bankruptcy loomed and shares traded for a nickel, as mentioned above, the tide has turned these days and the stock is fresh off a run that sputtered just below the three dollar mark.  No longer considered speculative, SiriusXM has become a major player in the radio entertainment industry with a lineup of unique content and personalities that keeps listeners and investors fully engaged.  The share price run was also supported by Liberty Media's (LMCA) methodically increasing position in the company that will imminently turn into de facto control of the company, pending FCC approval. 

Like the speculative players, however, SIRI has also retreated in price.  Even the big boys are vulnerable when the market turns bearish.  The case can be made, however, that the overall story has not changed and that any current retreat in price could be viewed by enthusiastic longs as another opportune time to buy.  Driving SIRI's run over the past few months was the rebounding auto industry.  Since much of SIRI's business comes from 'on the road' consumers, any growth in car sales inherently increases SIRI's exposure, especially since current deals place SatRad services in roughly three-quarters of new cars hitting the roads.  If consumer sentiment is growing, as indicated by financial reports leading into last week's election, and the auto industry is still seeing a boost, then the long case for SIRI can still be made and the recent slide may attract new interest as current longs still accumulate.

The bears will continue to plead their case, too.  A slew of insider sales last week may indicate that even the insiders may not see much more of an upside in this depressed market, which is concentrated more on the pending fiscal cliff than the overall state of the economy.  There may be something to that argument, although any sales by CEO Karmazin at this time should be considered a non-factor since he's on his way out anyway.

Given the attention garnered SIRI over the past months with its invigorated runup, the insider sales and dramatic market downturn, this will continue to be a story to watch.  As Liberty positions for control of the company and Mel Karmazin exits stage left, there may be some volatility in store - and that often means trading opportunities.

Also Noteworthy:

MRI Interventions (MRIC):  MRIC is another one to keep an eye on as the market drops and some of the more speculative plays retreat more substantially than the market as a whole.  As discussed during previous weeks, this company has been able to note impressive revenue gains in relation to the 'disposable items' associated with its ClearPoint procedures.  ClearPoint - with due respect to ClearTrace, too - are MRI-enhancing systems that provide medical professionals with real-time imagery during complicated procedures on the brain and heart, respectively. The company banks revenue on sales of ClearPoint itself, but can continue generating revenue from a sold system through those disposable items.  The case can be made that MRI Interventions is still in the earlier stages of growth as it is only just now preparing to significantly boost its sales force.  It is also noteworthy that the company has already attracted the interest of some big players, such as Siemens AG (SI), Boston Scientific Corporation (BSX) and Brainlab, hinting that larger partnerships or an all-out buyout could materialize once the technology is deemed more accepted and mature. 

Attention on the MRIC technology and speculation mentioned above led to a triple in share price during the summer months, although the current market swoon may again have shares trading for a more attractive speculative price.  Shares have dropped roughly twenty five percent in just a few weeks time, although nothing has changed in regards to the potential of the company.  The drop is likely just the result of speculative money leaving the markets, as discussed above.

With the long term potential still standing, MRIC will be one to keep an eye on as the market dips.

Facebook (FB):  Following a spike into the mid-twenties after an encouraging earnings report last month, Facebook shares dropped to below the twenty dollar again mark last Friday.  A late-day swoon had FB ticking down all afternoon and, again, much of that activity could be attributed to the overall bearish market sentiment driving the market action for the better part of all last week.  That said, the bearish sentiment is only exacerbated in regards to Facebook trading by the selling resulting from another round of lock-up expirations that dumped another 200 million-plus shares onto the trading markets.  Many investors with hesitant interest in taking a position in this company may be waiting to see the full impact of the lock-up expirations before jumping in, especially since the broad market dip has the potential to push prices lower than they otherwise would have been.  With hundreds of millions more shares still set to potentially hit market as the result of expiring lockups before year's end, FB will be one to watch.  Bearish forces could combine to give those hesitant investors the relative bargain that they've been waiting for.

Oncothyreon (ONTY):  Oncothyreon, too, has not been spared by the broad market sell-off.  Having dipped below five dollars already, last week's earnings announcement did little to keep the share price from falling further.  Any protracted dip in the ONTY share price, however, could provide an intriguing opportunity for investors looking to play the key trial catalysts slated for the first quarter of next year.  The potential of ONTY's non-small cell lung cancer immunotherapeutic treatment, Stimuvax, had shares trading for as high as ten bucks within the past couple of years, although shares slipped earlier this year when an independent monitoring committee recommended keeping the trials going.  Some investors hoped that positive results would have been overwhelming enough at that point to halt trials and move on to the approval stage.  Company officials indicated that the fact that the committee recommended keeping the trials going should be viewed as a positive event and it's now nearing crunch time for the final analysis.  Often times in the health care sector companies experience price runs leading into trial release dates, making any continued dip in ONTY a potential buying opportunity, albeit still speculative.

Roundup:  Attention is all on the pending fiscal cliff and the European bailout of Greece and other weakening economies.  As of Monday morning it looked like the Greeks voted enough austerity through to warrant another round of bailout money and stave off bankruptcy or a potential return to the drachma for the time being, but worries about other economies in Europe - like France - re-entering the recessionary phase will still damper investor enthusiasm.  Meanwhile, in Washington, nothing has changed in terms of the political make-up of the government, so the same entities that have not been able to come up with a budget for years are going to be tasked again with making something happen.  It is evidenced by the market sell-off last week that investors are skeptical that a deal can be reached.  Being a 'glass half full' kinda guy, I would count on the powers-that-be finally coming up with a plan that shows compromise by both sides;  if not, then it could get ugly, both politically and economically. 

Earnings season is still chugging along and the retail-heavy week ahead may not give us any indication about the overall health of the economy, but any bullish trends would validate the latest consumer confidence numbers and potentially spark a little more enthusiasm about the recovery.  European financial leaders will be meeting on Monday, too, and investors in the US will be paying attention.

With the potential for the bearish market to drop even further, many will be banking profits where they can in exchange for having some spare cash on the sidelines in anticipation of a new bottom, while others will look simply to take advantage of any individual bargains that may open up as the result of blind selling.  The shorts tend to take control in such scenarios, too, which could lead to more protracted individual price drops than would normally be expected.  While the shorts will make money in those instances, opportunities can also open up for longs who have done their homework and believe in the future of a particular stock.

Exciting times ahead.  Happy Trading!!!

Disclosure:  Long AMRN, IMSC, TTNP, SSH, SGYP, CPST.

Contact VFC's Stock House: vfc@vfcsstockhouse.com

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