The DOW experienced another triple-digit drop on Wednesday as weak earnings expectations and continued concerns expressed by the IMF about slowing global growth weighed heavily on trading during the mid-week period. Alcoa (AA) received the earnings spotlight on Tuesday evening and the company's results didn't exactly disappoint, but it was a tame revision of guidance that contributed to Wednesday's drop, as did Chevron's (CVX) stark revision of expectations. It wasn't expected to be a stellar earnings season by any means, so a few surprises here and there along the way could spark a broad-market rebound, but as long as the economic trends continue in line with the IMF forecasts, investors may be more apt to jump ship with cash in hand and wait for a re-entry point than to ride out the days of triple-digit drops on hopes of a quick rebound.
Although the color of the markets may have been painted red so far during the week, there are still plenty of mid-week upside and downside movers to keep an eye on - here's just a few of them...
Yum Brands (YUM): In defiance of what's expected to be a weak earnings season, Yum Brands spiked nearly 10 percent higher on Wednesday after the company beat earnings expectations with its most recent quarterly update. Revenue missed the expected numbers, however, although margins were notably higher for the quarter, according to the company's Wednesday morning conference call. It was also a pleasant surprise to many that Yum did not take a hit in China, where other companies have warned of slowing growth. Robust plans for growth in India also highlighted the enthusiastic report. The company also made good on its promise of last quarter to return to double-digit growth for the next report and investors demonstrated their enthusiasm with Wednesday's price spike.
As the old adage goes, people always have to eat - in good times and bad - and Yum's low cost food offerings should continue to enable the company to weather most recession storms, at least for the time being. Eventually, concerns will arise about slowing growth when the emerging markets become saturated with the likes of KFC and Taco Bell, especially if the economies slow in such markets as it has in China.
At the end of the day on Wednesday trading volume was up by more than quadruple on an 8 percent price spike while the DOW was dropping by over a hundred points again - providing a strong round of confidence for the company by investors, but it's also wise to keep in mind that if the markets continue to drop as they have during the mid-week, then any gains could be quickly erased as investors flee and realize profits with cash. Even the large-cap companies are vulnerable to profit taking after posting significant gains.
Right now, however, the tide is high for Yum Brands following this pleasant surprise of a report in a dim earnings season.
Healthcare, Biotech, Pharmaceutical:
Amarin Corporation (AMRN): Amarin shares dipped to below 11 bucks on heavy volume Wednesday following an 8k filing by the company that noted that the FDA had not yet rendered a decision on the new chemical entity (NCE) status for its recently approved drug that treats conditions of very high triglycerides, Vascepa. Another delay alone was not the sole cause of investor weariness, however, rather it was some not-so-subtle wording contained in the new 8k that was not present in the filings of the previous months. For instance, the following statement could be telling: "While Amarin continues to believe its arguments in support of an NCE determination for Vascepa are strong, the FDA may not agree with Amarin's arguments." That language was not present in the previous filings and should probably be construed by investors that Amarin is losing its battle with the FDA to have the NCE designation granted for Vascepa. The company also made it a point to note that the NCE designation was in fact a request by Amarin and not an action resulting from routine FDA standards of decision.
An NCE designation would grant Vascepa the coveted five years of exclusivity, but no matter how much attention is paid to this subject, it should not be considered a show-stopper for Vascepa success. The drug is still expected to become an eventual blockbuster, especially considering potential follow-on approvals, and a commercial launch is still set for early next year. The company is also building its patent portfolio, although detractors will argue that patents certainly do not protect an intellectual property as much as an NCE designation would.
What the lack of NCE could do is lessen the value of any potential buyout or partnership deal. Amarin has long been speculated as a buyout play with a deal predicted to be arranged at a per share value in the mid-twenties, but some may revise those projections downwards in light of the possibility that the NCE is a no-go. That said, an update on Wednesday noted that the company's buyout prospects remain high as Canaccord noted that the company is still in talks with numerous potential buyers, according to publicly available information. Canaccord also maintains a $26 price target on AMRN shares.
AMRN rebounded later in the day leading into the close and Wednesday's dip - although surrounded by the uncertainty of the NCE update - could prove to have been another solid buying opportunity over the long run as Vascepa gains steam with its market launch. Should any merger and acquisition talk heat up again, however, there may be some short-term returns to be had as well.
Always exciting, AMRN shares has been a noted mover in the market for weeks.
Inovio Pharmaceuticals (INO): Inovio Pharmaceuticals was another big mid-week mover with shares spiking higher on Wednesday on huge volume after the company reported that "its VGX-3100 therapeutic synthetic vaccine is capable of not only driving robust immune responses to antigens from high risk types of human papillomavirus (HPV) infection but that these immune responses displayed a powerful killing effect on cells changed by HPV into precancerous dysplasias." The noted results from the early study has the company confident in a confirmatory outcome of an ongoing Phase II trial for VGX-3100 in the treatment cervical dysplasias caused by HPV infection.
Also on Wednesday it was reported that data from the earlier trial were published this week in the peer-reviewed journal "Science Transitional Medicine." Any time a developing biotech or small pharma rates a peer-review it is seen as a solid validation of a technology and/or trial results. Many investors do not solely take a company's word or spin of its own trials as a validation of results, but seek for such peer-reviewed confirmation as a routine part of their DD. Therefore, Wednesday's 15 percent price spike should be viewed as a solid vote of investor confidence, especially considering the markets were falling for the duration of the day.
In addition to VGX-3100 Inovio has two other pipeline products in Phase II development and six others still in the earlier stages - all founded on the company's proprietary SynCon technology that produces synthetic vaccines to immunotherapeutically treat various infections diseases and cancer types. Of note from the earlier-stage product, Inovio is working on bringing a universal flu shot to market that would potentially treat emerging strands of influenza, rather than just focusing on one strand, as is the standard for the treatments of today.
Multiple trial catalysts are set to unfold over the next couple of quarters, namely interim analysis of ongoing trials, but Wednesday's peer-reviewed validation comes as the story of the day for this stock and makes it one of this week's solid share price movers.
OncoSec Medical Incorporated (ONCS.OB): OncoSec Medical shares also enjoyed a huge day as the broad markets dropped on Wednesday, spiking by a full 25 percent on huge volume. Wednesday's move followed two trading days to open this week that were also accompanied by significant volume and similar moves to the upside. While OncoSec has been a stock to watch for months based on its emerging electroporation technology - which it actually shares with the above-mentioned Inovio - and its associated treatments, but this week's move may have materialized in preparation for the increased exposure to investors expect as a result of presentations at two major medical conferences over the next couple of months.
Company representatives will first present at the 27th Annual Meeting of the Society for Immunotherapy of Cancer in Bethesda, Maryland later this month and then again next month at the 6th World Meeting of Interdisciplinary Melanoma/Skin Cancer Centres/8th EADO Congress in Barcelona, Spain. Without a doubt the trip to Espana will end up a better time for the OncoSec reps, but the expected exposure to investors and members of the medical community could prove a boon to this still highly-speculative company, as evidenced by the huge volume boost this week and the very significant movement in share price.
As noted above, OncoSec has devised the OncoSec Medical System (OMS), which uses the small electrical pulses of electroporation to delivery treatments directly into damaged or infected cells - and then trapping them there - without damaging or effecting any of the surrounding tissue. With the OMS, OncoSec has developed two distinct pipeline paths, ImmunoPulse and NeoPulse. ImmunoPulse uses the electroporation process to spark a patient's immune system to target cancerous cells itself while NeoPulse uses the OMS technology to destroy cancer cells using less harmful doses of bleomycin, a highly effective but also highly toxic anti-cancer drug. Both development paths have returned early successes, data from which will likely be a part of the upcoming presentations.
It's not every week that a company's share price moves as significantly as OncoSec's has this week, but when it does, it should be noted as a 'money' mid-week mover.
Technology, Products, Services:
Sirius XM Radio Inc. (SIRI): Right now there is simply no stopping Sirius XM. Already noted as a stock to watch this week based on recent developments, an expected positive earnings report and last week's share price movement, SIRI continued its solid trek higher on Wednesday with another 5 percent move after the company - as expected - increased its forecast for new 2012 subscribers based on the encouraging trends in auto sales. The revised guidance notes an expected 1.8 million new subscribers on the year, up from the previously-projected 1.6 million. Marking the best quarter for the company in years, Sirius added 445,921 subscribers, bringing its grand total 23.4 million subscriptions.
SIRI is already up over 50 percent on the year and volume of well more than triple the daily norm supported Wednesday's price spike. Additionally, Liberty Media's (LMCA) methodical and increasing position in the company has helped to fuel the run this year, as has positive analyst coverage, such as Bank of America's (BAC) enthusiastic "Buy" rating and price target of $3.75 issued earlier this month.
The official quarterly conference call is scheduled for October 30, but investors have a pretty good idea of how this one is going to go. The only cautionary note at this time would be that - aside from the threat of an overall market breakdown given the trend this week and geopolitical factors globally - SIRI has a tendency to pull back following quick share price runs, and SIRI shares have ran pretty quickly over the past few weeks. That said, the bulls have been winning this battle and developments have been unfolding in a manner positive enough for the company and its shareholders that it is worth entertaining the possibilities of this stock - that traded for a nickel not too long ago - could start to approach the Bank of America price target.
Roundup: The overall market trend is notably lower thus far in the week, but as we can see with most of the companies discussed above, there can always be winners in various sectors at any time. The geopolitical situation globally is not getting any better, and neither is the economic situation, according to comments over the weekend by the International Monetary Fund, so there is reason to proceed with caution in the markets. It's also worth noting that the political situation is a lot more up in the air now than it was just over a week ago before the first Presidential debate, and uncertainty - political or economic (since the two often walk hand-in-hand) always has some investors selling out and running to cash as quickly as Ahmad Bradshaw runs for 200 yards against Cleveland. Whichever direction the market heads for the remainder of the week, there's sure to be exciting developments from companies followed by us and other individual investors - enjoy them.
Disclosure: I am long AMRN. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.