At the conclusion of each week, VFC's Stock House examines some news items, stocks and stories that made headlines during the previous trading week, but may also make headlines or influence trends during the upcoming week as well. Although focusing intently on the biotech and healthcare sectors, due attention is also given to potential market-moving or game-changing companies in a broad variety of sectors and industries. The 'Weekly Stock Watch' will also introduce new companies for coverage and identify some stocks that may have entered 'buy territory'.
Huge trading losses at JPMorgan Chase (JPM) that sent company shares spiraling by 10% on Friday accentuated an already lackluster trading week in the broad markets and left the door wide open for another volatile week ahead. Combine that sentiment with growing uncertainty in Europe, where recent Greek and French elections have the potential to reshape the look of austerity and other measures undertaken by European governments in an attempt to maintain control over the eurozone's teetering economy, and investors may see even more of a reason to sell out and hold on the sidelines until some normalcy returns to the sinking global sentiment - a sentiment that has some predicting will bring parity between the euro and the dollar.
There could, however, be a savior in the works.
If the much-anticipated Facebook (FB) IPO - which is slated to take place on Friday - is deemed a success and makes millions for those ready to play along, then it could add a spark to a broad, sagging market and return the positive sentiment that is required to turn some of the bears back into bulls.
That said, if the IPO falters and shares quickly tumble, as some skeptics predict, then a protracted drop amid even more volatility could rule trading over the next couple of weeks, especially if the banks have a hard time recovering from JPMorgan's fall and concerns over the European debt crisis do not subside. As it stands now, some economists believe that Greece will eventually leave the eurozone and return to the drachma, a possibility that might not have the same negative impact on the valuation of Europe's currency now as it might have had months ago, before banks and investors were able to position their holdings and prepare for the fallout.
Should that happen, then the times might call for a couple of cheap vacations and more fairly priced Amstels and souvlakis on the Greek Islands. Nothing like a hungry and thirsty hoard of flocking vacationers to boost a sagging economy.
Back in the United States, the coming week will also sport a flurry of earnings announcements that will provide an indication of how much the consumer is willing to spend, given the easing of the economic recovery. Retailers such as J.C. Penney (JCP), Saks (SKS) and Target (TGT) are all slated to report during the upcoming week, following a Nordstrom (JWN) report on Friday that sent sales tumbling by 5% after missing analyst estimates on earnings.
Macy's (M) earnings last week played out well, however, indicating that consumers are still spending, regardless of JWN's modest miss. This week's continued reports from major retailers will be worth watching, as will the trading action of the big banks.
Bank of America (BAC) held up in relatively strong fashion after JPM's drop on Friday, but Citi (C) fell by 5% and will be heavily watched during the upcoming week.
Aside from the reputational hit and market cap drop endured by JPM, the heavy trading numbers are likely to attract even more attention from regulators, who were already coming after the industry with enough red tape to bandage the bruises of all the players on the NY Mets disabled list right now.
Additional scrutiny from Washington could keep away those investors who are fearful of government intervention in the private sector. That's a story worth watching, because the financials had recovered handsomely since the drops of 2008-09.
Even with all that going on this week, Facebook is sure to dominate the headlines.
Stay tuned for Friday, but here's a few more stocks and stories to keep an eye on...
Sirius XM Radio Inc. (SIRI): Sirius XM is always one of the most heavily-traded companies out there and - with a retail following that is second to none - is also one of the most heavily-watched. That has not changed over the past few weeks since renewed talk of a full Liberty Media (LCAPB) takeover has hit the street.
As it stands now, Liberty has a contract in hand to up its stake in SIRI to 45.2%, an effective purchase of over three hundred million shares for a price of $2.15/per. This move materialized shortly after the U.S. Federal Communications Commission dismissed Liberty Media's application to take control of Sirius' operating licenses.
Through additional stock purchases Liberty could have an even higher stake in the company by the third quarter of this year and is making a serious push to achieve majority control of over 51%. The anticipation of such a move has investors who view the $2.12 closing price on Friday as an opportunity buzzing with confidence, as indicated by the plethora of news and outlet articles hitting the headlines late last week.
With interest so high and with SIRI trading at what many see as a bargain again, the hype could match levels of when the company first signed Howard Stern to a contract. While it's highly unlikely that the renewed hype will lift the SIRI share price to levels seen after the Stern announcement, it is likely that there is significant room to the upside available, especially once Liberty reaches the levels of interest that it desires.
Once again, SIRI is a hot stock to watch.
Prolor Biotech (PBTH): It was definitely a volatile week for shares of Prolor Biotech after the company followed up positive trial news with a stock offering that sent shares south by 8% on Friday.
Prolor has had numerous catalyst events unfold during the past few quarters, including the initiation of a Phase II trial in Europe that will measure the effectiveness of the company's Carboxyl Terminal Peptide (CTP) in children, with a treatment for hormone deficiency known as hGH-CTP.
Utilizing the CTP technology, which stabilizes proteins in the bloodstream by slowing the process in which the protein is removed from the body, and therefore creating an extended life span of the protein, hGH-CTP could essentially replace once-daily injections of hGH for hormone deficient patients with a once-weekly injection - and do so in a market that is worth billions.
There's little doubt that such a replacement for the existing standard of care has the potential to reap large chunks of market share, given the quality-of-life improvements for patients, and the early trial successes thus far have the company and its investors excited for the unfolding of other trial catalysts later this year and early next.
Prolor is also making headway in bringing its technology to market in the treatment of obesity and diabetes, both of which would position the company to enter into other billion-dollar markets.
Given the decline in price following the stock offering, PBTH will be a stock to watch during the coming week, and may also trade at attractive prices to accumulate for those looking to play the future catalysts.
Also of note, Merck (MRK) has already successfully commercialized the technology on the European market in treatments of fertility for which it owns rights.
Keryx Biopharmaceuticals (KERX): Shares of Keryx Biopharmaceuticals (KERX) were on the fly on Friday, rising by 15% on heavy volume as investors may be embracing the potential of Zerenex as a treatment for end-stage renal disease.
Keryx shares quickly dropped about six weeks ago after disappointing trial results for Perifisone as an anti-cancer agent circulated the wires, but positive Zerenex results from Japan led to a nice rebound.
Even after the late-week run of KERX shares, this stock still may have significant room left to move to the upside, especially during the lead-in to Zerenex Phase III results, which are due out later this year. Because the company's two pipelines were moving along simultaneously, the failure of Perifisone has the potential to be quickly negated by positive Zerenex results, if that is how the story in fact plays out, demonstrating the advantages held by smaller, developmental companies who have more than just one product in development.
Although some have questioned the market potential of Zerenex due to competition - including generic - already out there, the treatment may still have a chance to achieve significant market share due to its superior safety profile and attrition levels of patients on dialysis who often look to utilize other approved products in hopes of finding better results.
Friday's move may be an indication that the market is starting to place a higher valuation on Zerenex, and given the measure of the product's success and safety profile thus far, the move could be warranted.
Still a story to watch. Much higher moves in market cap should be justified if Zerenex reaches commercialization.
Human Genome Sciences (HGSI): GlaxoSmithKline (GSK) took its buyout bid for Human Genome Sciences (HGSI) hostile last week after receiving a rejection from HGSI management in response to its first bid of $13 per share. Glaxo is Human Genome's partner for the lupus drug Benlysta, which has been slow to ramp-up on the open market following its commercial launch just over a year ago.
Although going hostile adds some nice flair to the situation, it's unlikely - at least in my opinion - that going directly to the shareholders is going to seal this deal. It's more likely that this is but another chapter in a long, ongoing saga that will ultimately end in marriage.
Still, the story is one to watch as another bid could materialize at any time.
Celsius Holdings (CELH): Celsius Holding inched closer to its recovery last week after a Monday earnings announcement reported sales of $2.5 million for the quarter, up from $2.2 million during the same quarter of the previous year and up 41% from the fourth quarter of 2011.
Volume picked up slightly after the announcement, and has been inching higher all year long, and the company is again one to watch after the hiring of a PR firm has followed quite a few quarters of demonstrated stability.
Celsius is the maker of the calorie-burning beverage of the same name and the company has introduced numerous new flavors over the past few quarters, including powdered packets that produce the same effects as the drinks when added to water. A pre-workout Celsius mini-shot is also for sale on the company's website.
Those looking for potential growth stories may like the stability demonstrated by this company and its stock over the past few quarters, and as volume continues to increase, share price could follow.
Implant Sciences (IMSC.PK): Shares of Implant Sciences were on the move again last week following an announcement during the previous week that demand for its explosive and narcotics detecting technology was picking up at a rapid pace around the globe.
Implant has made huge strides this year in implementing its technology that was requested to serve as a part of a layered security plan at the Summit of the Americas in Colombia earlier this year that became famous for the dalliances of the Secret Service.
On Wednesday the company announced the addition of Dr. Darryl Jones as Vice President of Sales and Marketing to the team. According to the associated press release, "Dr. Jones has led significant sales growth at some of the largest firms in the security industry including GE Security and Safran's Morpho Detection."
Dr. Jones himself stated that:
Implant Sciences represents the next generation in explosives and narcotics trace detection. I see tremendous potential for further global and domestic market penetration for the Company's current products and its underlying technologies hold great promise for a larger product portfolio that can be rolled out to its global distribution network. I am excited to contribute to, and lead the Company's sales momentum.
As has been the case for the duration of 2012 so far, IMSC will be a stock to watch after last week's push to above a buck again.
Arena Pharmaceuticals (ARNA): Shares of Arena Pharmaceuticals soared on Friday after an announcement hit the wires that an FDA advisory panel convincingly recommended approval for its weight loss drug lorcaserin. Lorcaserin is due to receive an official FDA decision in June, but previous safety concerns had investors doubtful that approval would be granted - until Friday when the positive review sparked a share price run that at one point reached well over 75%.
Needless to say, any late-week price action like this sets the stock up to be one to watch for the following week, too, so this will be a story to continue monitoring.
Of note, shares of Vivus, Inc. (VVUS), a company developing a weight-loss drug of its own, received a sympathetic 9% price spike as well.
TrovaGene, Inc. (TROV.PK): TrovaGene Inc. has been a stock to watch lately as volume and news catalysts picked up enough over the past couple of weeks to support a near-double in share price. The company has announced some key additions to its management team in an effort to boost its leverage in bringing a unique diagnostics technology to market.
The company announced on Thursday of last week that it was awarded a key patent in Europe, a move that strengthens TrovaGene's portfolio of intellectual property at a time when increasing investor interest has led to a rising share price.
TrovaGene is developing different diagnostic tests that, if successful in development, would be able to detect numerous cancer types and various infectious diseases by identifying specific transrenal DNA and RNA originating from normal and diseased cell death in urine.
The market for such diagnostics is over $20 billion and with a strong position of patents and technology, TROV has the potential to chip away at a significant portion of that market share. Although early along in development, early studies have demonstrated that TrovaGene's technology could be superior and more accurate to the current market standards, and the company also boasts a strong patent position to protect is proprietary assets moving forward.
Until April, TrovaGene had been trading relatively under the radar, in terms of volume, but the recent news bytes have put this one back on the map.
Last week's trading action was indicative of growing investor interest and this will be one to watch during the coming week, as well.
Nephros, Inc. (NEPH): Nephros, Inc. has risen from the brink. A long delay with the FDA regarding the clearance of its Hemodiafiltration ("HDF") system for the treatment of chronic renal failure is over, and as of the beginning of May, the company is free market the product commercially.
Shares of NEPH have returned well more than a double since the news hit and were up again on Friday by 3%. The company has a pipeline of water purification products that could gain momentum with the FDA clearance of the HDF system.
Aside from now being a new hot stock to watch, this company has also become a demonstration of the quick returns that can go along with picking up a few 'night on the town' shares at depressed prices and then waiting around to see if the pending news pans out.
Also worth watching...
Mannkind Corp (MNKD) dropped to below the two dollar mark on news that the most recent round of Afrezza results will be released three months later than previously expected. Come next year, this one could turn into a huge rebound story if results are positive.
Advanced Cell Technology (ACTC.OB) fell 5% on Friday. The lower this one goes, the better buy it may become based on the potential of the company's stem cell technology, currently being applied in conditions of severe blindness.
Cel-Sci Corp (CVM) back above fifty cents.
Agenus Inc. (AGEN) trading with huge volatility, currently back in the high fives.
Disney (DIS) proving with the Avengers that there might have been something big to the acquisition of Marvel a few years back.
Synergy Pharmaceuticals (SGYP) still hovering at right around the price of its recent stock offering. With the cash-raising event completed, shares could rise again on the billion-dollar potential of its lead product candidate.
Picking up a few shares of Titan Pharmaceuticals (TTNP) at the current levels.
And lastly, ASCO is right around the corner. Many cancer companies tend to spike leading into the expected presentations due to take place at the conference, but bear in mind that these may be best played as trading opportunities.
Disclosure: Long CELH, MNKD, IMSC, TTNP, SGYP, CVM, NEPH, PBTH. May purchase shares of KERX within three trading days.
