Tuesday proved a day of modest rebound for international markets, most of which were hammered on Monday on fears over the Cyprus bailout plan and how it could potentially hit the rest of Europe. Futures action indicate a similar open in the US as well. Investor caution has eased once the Cyprus bailout news was digested and the fiasco became more of a comedy show between Cypriot banks and Russian billionaires than anything else as markets stabilized, although initial concerns arose when some pundits wondered whether the savings tax proposed in Cyprus could also be implemented in other Western countries, but those concerns are largely considered unfounded because of existing regulatory measures in other eurozone (EZ) countries and also because of the unique relationships between Cypriot banks and its foreign investors, like Russia.
It's highly unlikely that any scenario evolving from the bailout of Cyprus will have any lasting effects on the rest of the EZ economies, hence Tuesday's more enthusiastic trading. The situation has, however, caused the euro rate to drop a bit in relation to the dollar, but that should cause little concern to investors and do more to satisfy the budgets of any dollar-bearing tourists ready to start taking advantage the spring holiday weather in Europe.
Also grabbing investor attention on Tuesday will be the two day Fed meeting where it's expected that Chairman Ben Bernanke will maintain the current stance of quantitative easing, even in light of recent economic progress in the U.S. Investors will note, however, that the Fed will have to make a move at some point if the signs continue to illustrate a healthy rebound.
Washington's budget talks and threats of additional sequestration likely add too much uncertainty to the situation over the short term for there to be any changes now, though, as last quarter's flat GDP numbers hint that the Fed nor the politicians are apt to take any measures now that would stifle growth over the current and coming quarters. Regardless, any shift from expectations during this meeting has the potential to move the markets more than anything else likely to play out for the remainder of this week, barring any surprise developments in Europe.
As these and other major news items develop, there are still plenty of individual stocks and stories to keep an eye on. Here are just a few of them for Tuesday, 19 March 2013 ...
Explosive Trace Detection (ETD) / Global Defense:
Implant Pushing Higher After Landing US Government Order
Shares of Implant Sciences (IMSC.PK) had trended lower since announcing the milestone TSA approval of the Quantum Sniffer (QS) B220 explosive trace detector earlier this year, but may be positioned for a rebound after moving higher by nearly five percent on Monday, following a boost in volume last week resulting from another key announcement. Implant announced this past Thursday that it had landed a contract worth nearly $600,000 from a U.S. government agency for its QS H150 handheld explosive trace detector, a key sign that the company may be starting to make inroads into the U.S. market after already demonstrating significant growth overseas. This most recent deal highlights a few key points for investors to consider moving forward.
Although investors are concentrating mainly on the potential of the TSA-approved B220 to infiltrate the air cargo screening market, it's a nice sign of validation that the H150 is banking deals in the U.S. government arena. Citing the comments of Mr. Todd Swearingen, Implant's General Manager of the Americas, in the above-linked press release announcing the deal, the company has landed multiple new U.S. government customers and expects to land more over the coming quarters as Implant grows a foothold in the homeland defense/ETD market. Evidence that a significant push into the U.S. market is being realized, when combined with expectations of a growing U.S. customer base, could lead to a speculative, but steady move higher for Implant shares over the coming weeks, as evidenced by the modest spike on Monday.
Additionally, last week's sales announcement emphasizes that homeland and infrastructure security money is still flowing, even with thoughts of government sequestration in mind. Furloughs and cutbacks may be the talk of the day, but as previously discussed, money allotted to this sector should still flow with an open tap, possibly only held up temporarily for proper authorizations, given the (lack of) budget climate Washington has operated in for years. The deal is also a sign that Implant, being the only fully-American company in the ETD sector, is beginning to show signs of beating out the competition in the bidding process, another note to emphasize for those concerned that a small and still-growing company may not be able to compete with the big boys of the sector.
Naturally, many are still watching on the sidelines for a major deal to culminate from the B220 approval of earlier this year, but each solid order landed in the U.S. market adds another layer of validation to Implant's potential to take prime advantage of a booming industry. Financial concerns are minimal at this time, too, due to a recently-restructured agreement with primary creditor DMRJ Group, paving the way for attention and resources to be paid solely to landed contracts such as the one noted last Thursday.
A growth story that could be gaining steam.
BlackBerry's Revival May Be For Real
It's been a months-long debate as to whether or not the BlackBerry (NASDAQ:BBRY) revival would eventually be considered for real, or just go down as a failed, last-ditch attempt at relevance for a once-proud company. Initial expectations were modest, as previously outlined, even though initial reception of the Z10 overseas seemed encouraging, but signs are emerging leading into the US launch of the BB10 platform that competitors should not take the BlackBerry revival lightly.
Potentially the biggest signal to date of such was the announcement last week that one of the company's existing partners placed an order for one millionZ10 units. While the order in itself is not indicative of individual sales to consumers just yet, it may be a noteworthy sign of the product demand that partners are expecting once the launch is underway in the US. It's also likely a solid reason why BBRY shares rebounded to over fifteen dollars and could threaten to push the recent highs of nearly twenty dollars, which were achieved just before a couple of analysts came in and killed the rally.
A key date to watch moving forward, aside from the initial wave of the U.S. launch slated to take place later this week, is 28 March. BlackBerry is slated to release its fourth quarter earnings report, which will not hold much relevance in terms of the international launch that got underway in January, but any guidance given or firm numbers from January and February could go a long way to corroborating any estimates circulating the streets at the current time. As mentioned above, tepid expectations have turned more positive over the past weeks and have the potential to gain even more momentum, given some reports - such as a recent one from Forbes - that indicates not only that the BlackBerry launch may still be gaining steam, but it's doing so while also stealing significant market share from the competition.
It also helps that the company is introducing numerous security features into the market that will enable users to separate personal from business information. That's huge in today's age of hacking and cyber-attacking.
It's still very early in the BBRY revival game, but indications have it that the launch is leaning towards the more positive side of consensus estimates. The strategy of creating hype in the U.S. with an earlier overseas launch looks to have paid off, if an order for one million units is to be judged as a sign of expected demand. There may not be that 'gotcha' factor to whole-heartedly convince consumers to throw down the iPhone just yet, but there is plenty of room for a fresh device on the market after Apple (NASDAQ:AAPL) completely over-saturated its customer base with updated models of its brands being released just about every other day.
For the BlackBerry loyalists who like that "QWERTY" keyboard with real - not virtual - buttons, the Q10 launch marks another pivotal point to watch for over the coming months. This is a revival that looks to be gaining momentum again. Will it be enough to launch BlackBerry to its former position of prominence? Maybe not, but the timing may be perfect for the company to steal back enough market share to launch the BBRY share price to well north of its current levels sooner rather than later.
Healthcare, Biotech, Pharmaceutical:
AntriaBio Trading Volume A Potential Precursor To Price Movement
As noted earlier in the month, an initial boost in trading volume for AntriaBio, Inc. (OTCQB:ANTB) indicated at the time a growing amount of investor interest to the company and its chief pipeline product, AB101, which could potentially replace once-daily basal insulin shots for diabetics with a once-weekly injection instead. Over the trading periods since, volume has picked up even further and could be indicating a potential move higher, for those monitoring the radars for potential 'volume before price' plays, and the company has a few milestones on the horizon over the coming months that could validate that theory. Probably the most noteworthy of those milestones would be the initiation of human clinical studies for AB101 and the subsequent release of results, expected to take place before the end of the current year. Given the size and scope of the rapidly-growing market for diabetes treatment, as discussed in a sector-focus piece last week, AntriaBio could find itself directly in the flight path of potential partners or purchasers of the technology, should this year's human studies confirm pre-clinical testing.
Investors should bear in mind, however, that the AntriaBio pipeline is still very early in the developmental stages, potential aside. That said, due to the nature of the company's pipeline and planned trial designs, the expected time frames for seeing clinical treatment translate into results is only a fraction of that normally expected in the sector from developmental drugs and treatments, which could be a key reason why investors are taking an early look at the company, as evidenced by the growing trading volume.
Another angle circulating the wires, however, has highlighted a significant amount of short interest building in the ANTB stock. As the above-linked article points out, however, the nature of the booming diabetes market makes that any such position in a potential next-generation treatment could be risky, as speculative and catalyst-based investors are just as likely to start taking a part in the daily trading patterns as those willing to hold over the long term to see the story out. It's likely that any short interest is giving more credence to the early phases of AntriaBio's pipeline development and relatively long development path ahead, but it should also be noted the more than $100 million has already been invested into the development of AB101, according to the above-linked report, so the technology is largely considered to be on sound footing, thus far in development. With numerous upcoming catalysts pending, the early short interest may be a bit premature and has the potential to lead to a squeeze at some point.
Like the booming Global Defense and ETD market that Implant Sciences is looking to infiltrate, as outlined above, the diabetes treatment market is one of the booming subsectors of the healthcare industry right now, and any product that has the potential to take current treatments to the next level should be watched for both speculative catalyst-based trades and potential holds for the long term. AntriaBio's growing trading volume is an indication that others are beginning to share that view.
Dendreon Says "All Eyes Ahead" With Lawsuit Settlement
Dendreon (NASDAQ:DNDN) have drifted back towards the five dollar mark of late, but Monday's announcement of a class action securities settlement puts to rest any uncertainty created by the litigation and concentrates attention solely towards Provenge sales and the development of the pipeline. According to Monday's press release, Dendreon has decided to settle the case for a total of $40 million, $38 million of which will be paid by the company's insurers. The lawsuit originated against Dendreon and certain of its officials in 2011 over alleged 'false and misleading' statements in regards to the Provenge commercial launch, allegations which the company still denies, even in light of the settlement. Given the sheer amount of lawsuits that are filed against companies in the healthcare and biotech sector, it's not often that one comes to fruition as this one has, but a resolution does clear the muddy waters leading forward as it takes any speculative impact out of the equation and allows investors to - as mentioned above - concentrate on what's important; and right now that is growth in Provenge sales and pipeline development.
Indications are solid that a reversal-in-trend can be noted in Provenge revenue, as evidenced by the latest earnings numbers, and as such the DNDN stock has been labeled as a potential rebound play for the year by multiple stock-watching websites. The reversal noted during the most recent quarter, however, was not significant enough to make instant believers out of the many non-believers who still exist, but it marks a potential foundation for which the company can grow on during the coming quarters, especially in light of expanded insurance coverage and speculation that Provenge will be used in conjunction with other cancer-fighting treatments on the market in order to boost its overall effectiveness.
Another factor that could contribute to Provenge growth as soon as later this year would be its approval in Europe. A final decision is expected over the near-to-mid term and could provide a shorter term price catalyst for the stock for those looking at utilizing some trading shares while also potentially holding a core group for the long term. Beyond Provenge, Dendreon has put together a fairly deep pipeline of products and treatments, some of which are nearing the latter stages of development.
A fair amount of speculation still exists around this company's potential to rebound, but evidence is there that the current prices could once again prove an attractive entry point for those looking to play a rebound. The lawsuit resolution only helps in limiting the uncertainty moving forward.
Roundup: Indications from Cyprus during the US pre-market hours hinted that small savers would be exempt from the 'bailout tax', but the likelihood of the package coming to fruition is slim, nonetheless. As mentioned in the open, there is relatively little concern that the situation in Cyprus would effect the Euro Zone as a whole, even if the small nation were to leave the EZ altogether. With that in mind, attention on Tuesday - and for likely for the remainder of the week - will be paid to the latest Fed comments and to developments in Washington related to sequestration and the ongoing lack of a budget deal. The rally to record highs looks to have petered out for the time being and a hovering pattern could be in the works for the short term as the market looks to digest the latest round of economic news for the month, and for the ongoing quarter. There's still plenty of good stories out there to keep an eye on, and still enough buying opportunities to fill up a NY Mets disabled list, even in light of the recent rally.
Disclosure: I am long IMSC.PK, BBRY, OTCQB:ANTB. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.