Stocks ended the day slightly lower on Wednesday as reports hit the wires noting a retraction in the U.S. growth rate for the fourth calendar quarter of 2012. Analysts and experts had expected a one percent growth rate for the quarter, so the miss came as a bit of a surprise. The markets did not falter, however, and only modestly declined as the retraction came about largely due to a drop in federal defense spending, and not because of any other variables of weakness that would threaten the strength of the recovery.
In fact, other economic indicators behind the report looked strong, as outlined in a New York Times article on the subject. A stand-fast approach by the Fed, which concluded its meeting on Wednesday, also helped to reassure investors that no drastic changes to policies and procedures already in place are forthcoming. Barring any unforeseen news or a reversal in the trend of this quarter's earnings reports, it should be smooth sailing ahead for the remainder of the week.
Another day is upon us to keep an eye on some hot earnings stories and other stocks that could potentially move markets, individual sectors or personal portfolios. Here are just a few of them for Thursday, 31 January, 2013 ...
Facebook Mobile Growth Train Has Left The Station
Facebook (FB) shares were on pace to open Thursday's trading day modestly to the downside after the company's profit numbers took a drastic hit during its latest earnings quarter, as reported on Wednesday afternoon, but the good news is that its revenue generated from mobile platforms soared on a quarter-over-quarter basis. Overall, 23% of the company's ad revenue came from mobile, up from just 14% during the prior quarter. Investors had some concerns last year of Facebook's ability to significantly monetize the mobile arena, but this latest earnings report should quell those fears.
Judging from the quick rise in share price from under twenty bucks to over thirty, many investors had already pushed those concerns aside. Those still a bit squeamish about jumping in may feel more easy about doing so now, especially if shares dip due to the profit drop.
The only saying goes, "It takes money to make money," so with that in mind, investors should not be overly worried about the decline in profit numbers because it's now been demonstrated through the mobile growth that it's been money well spent and will spur growth later on down the road. It should also be expected, though, that Facebook will push some money into this 'Graph Search' thing, too, so profit numbers may be hit again over the coming quarters, but again - it shouldn't spark too much of a concern unless the money spent is not translating into future growth.
Amazon.com Inc (AMZN), for instance, has been heftily rewarded by investors over the past few quarters for spending heavily on measures that are likely to positively impact future growth rates. Facebook may be in the same boat.
There's little doubt that the social media giant is back on solid footing after some post-IPO growing pains. The only concern moving forward, however, that investors should at least entertain, is that social media is very fickle - the 'next great fad' can threaten to derail everything, as was demonstrated by MySpace. Thus far, Facebook has managed to stay well ahead of any and all competition, but the second data starts making headlines that users are flocking away from FB in favor of another social media site, or trends start taking shape that users are spending less and less time perusing FB profiles, then investors could get nervous in a hurry. Neither scenario looks likely over the short term, though, so investors should enjoy the expanding growth now.
The mobile train has left the station and the 'Graph Search' engine could be chugging along before long, too. With more potentially personalized ads in store than Facebook has used before, this could all spell money.
Implant Surprises With Early Report
Implant Sciences (OTCQB:IMSC) was not originally expected to report earnings until mid-February, but in somewhat of a surprise move the company announced on Wednesday that it would report this Thursday, 31 January. The numbers will be released after the market close and a conference call/webcast will commence at 4:15PM. Naturally, when a company bumps up its earnings date, speculation will swirl among investor groups as to why the move. It's generally regarded that 'earlier' means 'better' and in the case of Implant, investors already have a pretty good idea that is true. From reviewing the sales PRs during the previous quarter while also taking into account statements from management during recent investor calls, there's little doubt that revenue is on the significant upswing.
With that already known, investors will be keying in on comments relating to any orders already placed or potentially taking shape as a specific result of the recent B220 approval from the TSA for air cargo screening. It's been surmised for some time now that the approval would translate into more domestic sales than had been seen up until that point, especially since the TSA has mandated that - as of 3 December - all cargo in-bound to the US on passenger aircraft will be screened for explosives. It just so happens that the B220 approval is for its use in air cargo screening.
Shares have traded down rapidly this week with volatility mixed in. As I pointed out in an earlier write-up, such action is often indicative of some investors or traders looking to take out 'stop loss' and 'limit' orders in an attempt to accumulate shares in anticipation of a catalyst event. It's possible this theory may turn out to have been true in this case, too, considering the announcement Wednesday that earnings are here. Once the news hit the wires, volume picked up a bit and shares closed the day nearly seven percent higher.
IMSC investors generally ask solid questions during these conference calls and the same should be expected for Thursday. A sporadic analyst or two also pops up from time to time, and that exposure should increase as Implant starts achieving its growth goals. Expect questions on Thursday to be geared towards the possibilities of large contract orders, especially in relation to the TSA approval, and also towards the DMRJ debt carried forward. During the last call the number was below thirty million and investors will be looking for insight into the plan moving forward. With revenue increasing, it's expected that the debt issue will be addressed more head-on, which will go a long way to alleviating any investor concerns still lingering in regards to DMRJ.
The announcement of a large TSA-related order placed in conjunction with or shortly thereafter the earnings release could provide the bang-bang punch to get shares rolling. Already, based on potential alone, this stock could quickly turn into a speculative double, if not more. Another angle to consider is the military implications of the Sniffer technology. Aside from its implications in the government and private sectors, military bases in the US and around the globe may find use for this technology during routine vehicle searches. In regards to military and police applications, the Sniffer technology could start putting the bomb-sniffing dogs on the unemployment line.
Although flying well below the mainstream radar, IMSC's Thursday earnings report will be a hot to watch, as this company could be on the ground floor of a booming explosive trace detection industry.
The Research Is Done, The Launch Is In Motion, So BlackBerry It Is
The much-anticipated BlackBerry 10 launch finally took place on Wednesday as the first two of a string of new phones were also introduced, but just as memorable was the announcement that Research In Motion (RIMM) would effect a name change and be known simply by the name of its famous brand, BlackBerry. Although the months-long hype leading into the launch sparked a quick triple in the share price, RIMM continued to follow its "sell the news" trend on Wednesday and closed the day down by another twelve percent. As mentioned earlier in the week, the speculative nature of this company's recovery is in the rear view mirror - now it's time to trade on performance, hence the reason many investors decided to bank quick profits (no one should ever argue with a triple) and either move on to another quick mover or simply stand on the sidelines for a bit an wait for re-entry.
As the share price has dropped, RIMM is again entering a trading territory that may be attractive for those looking to play the more long term rebound. Initial reception of the new devices was mixed, according to circulated reports, with most agreeing that the platform is a worthy effort to regain some lost luster for BlackBerry, but there were also concerns that there was not a "blow-away" feature or application that would, in itself, convince consumers to switch away from their current product in favor of BlackBerry's. That fact will likely keep shares from running until sales numbers start being released, but evidence of a quick launch for BB10 could quickly spark another rally as those still awaiting that evidence while sitting on the sidelines start to jump back in.
With the launch officially underway and a name change in full effect (although that means nothing to the bottom line) RIMM is still one of the hotter stories to watch. The launch could not have come at a better time for BlackBerry, considering that there is some evidence that consumers may be reaching the point of over-saturation with Apple (AAPL) products, and the recent drop in price may have offered investors another 'second chance' to tag along for the BlackBerry revival, if one materializes.
Healthcare, Biotech, Pharmaceutical:
Amarin's Rebound Potential Taking Shape With Dip Below Eight
Shares of Amarin Corporation (AMRN) dipped below the eight dollar mark on Wednesday, which means relatively little in the grand scheme of things, but could be a psychological level for the more squeamish investors who may have had stop loss orders set at that point. Investors have been nervous enough as shares slipped following Vascepa's approval last year,and it also didn't help that some popular financial media outlets railed the company during that time, too, when a buyout didn't take shape and the company decided to go-it-alone for the Vascepa launchy.
With eyes towards the future with due consideration to the potential of Vascepa, the current AMRN levels could turn into a nice rebound buy over the coming quarters, especially if the drop below eight incites additional selling. Amarin's current market cap gives little credence to the fact that many still consider Vascepa a potential billion-dollar blockbuster on an annual basis. It may take some time for the product to catch up to its potential on that scale, granted, but strong first year sales that approach even half that amount could spark an influx of new conviction and quickly have shares approaching previous highs.
Over the shorter term, and as mentioned previously, Vascepa's New Chemical Entity (NCE) status is key. A positive approval there will likely send shares over ten in a heartbeat, as it will confirm the product's extended protection on the open market, and could be the final piece to any buyout puzzle that may be in the works.
With the above-mentioned items in mind, AMRN's continued dip is setting up as an attractive buy, in my opinion, for those banking on potential. As I've mentioned before, this story reminds me of the trading action experienced by Human Genome Sciences before that company was swooped up by GlaxoSmithKline (GSK) when it was all said and done. As has been the case for some time now, one of the hotter stories to watch, especially as the stock drops on no negative news release.
Keryx Public Offering Revealed
Keryx Pharmaceuticals (KERX) announced on Wednesday evening the pricing of its recent stock offering. The company will issue over eight million shares at $8.49/per. As also noted on Wednesday, management handled this offering in a way that is hugely beneficial to shareholders, since waiting for the higher price kept dilution to a minimum. Many companies conduct these things in advance of results just in case they don't turn out positive, which leads to much more dilution since the shares trade for much lower prices. In this case, maybe in a show of confidence that Zerenex was on the course for victory, management waited until the post-approval spike to raise the cash, allowing investors to bank hefty rewards beforehand.
Moving forward, expect KERX shares to continue to trade with volatility, based on the quick price run and the sheer amount of shares traded over the past few days. Profit-taking that has yet to take effect probably will, while shorts are likely to jump on - if they haven't already - given the fact that revenue is still a ways away. Shorts typically jump onto quick moves in this sector anyway, regardless of the story behind the stock, because of the still-speculative nature of these companies.
Any dips materializing from the lull in news or the short action may provide those looking towards the long term another chance to jump back in. With very positive results already banked for Zerenex, it's also possible that buyout and/or partnership talk could surface, leading to additional speculative price runs over the coming months.
Sunshine Positioning For C-Pulse Future With Stock Purchase Plan
Sunshine Heart (SSH) is another company who experienced a share price dip on the heels of a cash-raising event that is worth keeping an eye on for the long term potential of its flagship product. Sunshine announced in January a stock purchase agreement with Aspire Capital Fund, LLC in a deal where Aspire, at the time of Sunshine's choosing, will purchase up to $25 million worth of SSH common over a period of two years. The money, as described in the associated press release, will be used to fund the development and - in part - the commercialization of the C-Pulse Heart Assist System. C-Pulse, which received a CE Mark approval in Europe last year, is an implantable medical device intended to treat patients of Class III and ambulatory Class IV heart failure. Because it is implanted outside of the blood stream, it may be considered a minimally-invasive implant, and could be considered as having no competition on the market, given that similar devices, by Heartware International (HTWR) and Thoratec (THOR), for example, are inserted into the blood stream.
There will be peaks, valleys and volatility along the way for Sunshine, as with all companies looking to bring a new drug or device to market, but the recently-announced stock purchase plan adds some certainty about financing for the future, which allows investors to better gauge the timing and pace of their investments and concentrate on clinical data - or the pace of commercialization, as should be the case in Europe. C-Pulse is slated to enter a multi-billion dollar market, which makes any potential pullbacks resulting from this financing deal as potentially worth looking at for a longer-term play. Shares remained under six dollars leading into Thursday's trading day.
Roundup: Although most international markets traded down on Thursday, the U.S. open could return some additional enthusiasm as investors push aside any concerns caused by Wednesday's GDP number. Bloomberg headlines during the early morning hours emphasized that the U.S. economy is still on the rebound, so investors should not fret the report, while it was also noted that there is good news emanating from Europe, too, which is not often the case these days. With encouraging indicators and upbeat earnings reports still driving the action, Wednesday's modest retreat could quickly turnaround as the markets position to make another push towards record highs. Key data to watch for Thursday includes weekly jobless claims and then December's consumer-spending and personal-income numbers. Another round of positive results could lead to some more green for the day.