The presidential election came to an end last night and both investors and voters received the best possible outcome - a situation whereby a winner was recognizable as a clear winner. Uncertainty breeds skittish investors and we would expect a bit of a bounce as there will be no protracted court battles or recounts which the outcome depends on. This is good for the market, and shall allow the current characters to return to their roles of fixing this fiscal cliff.
We have economic news due out today and it is as follows:
MBA Mortgage Index - N/A
Crude Inventories - N/A
Consumer Credit - $10.6 billion
Asian markets finished mixed:
All Ordinaries - up 0.68%
Shanghai Composite - down 0.01%
Nikkei 225 - down 0.03%
NZSE 50 - up 0.39%
Seoul Composite - up 0.49%
In Europe markets are trading higher this morning:
CAC 40 - up 0.81%
DAX - up 0.43%
FTSE 100 - up 0.27%
OSE - up 0.41%
One of the hottest stocks among the old tech plays recently has been AOL (AOL) and yesterday the gains continued. The shares closed at $43.70/share after rising $7.89 (22.03%) after the company announced revenues which stopped shrinking. This may be the beginning of the company's content focus reversing the course of the company's growth prospects. AOL is no longer the subscriber based platform, but a company growing ever more dependent upon advertising dollars and shall continue to shift towards that business model. Lately the company has done everything right, from selling off noncore assets (think patents), distributing cash to shareholders and delivering results with their content strategy.
Express Scripts (ESRX) stated that their results came in below Wall Street expectations because the bar was set too high. We find that comment absurd, and investors were not impressed by it either as they sent shares lower by $7.73 (12.29%) to close at $55.15/share. Looking at the numbers, the company missed analysts' revenues estimates by about $500 million but beat the bottom line numbers, which has been a common occurrence over the past few quarters across the entire market. The company indicated that they expected to see a loss of business in 2013 based on the economic situation but our understanding is that they expect loss of revenue but growth in earnings - so more of the same.
Shares in Vivus (VVUS) fell $3.13 (20.94%) to close at $11.82/share on volume of 24.3 million shares after reporting their quarterly financial results. The company's loss widened this quarter as sales are growing much slower than analysts and investors had expected. When looking at the company, investors need to recognize that they are not going through traditional pipelines to get their drug sold and patients are required to pay a higher percentage of its costs than they are accustomed to for various other drugs. A big Pharma partner could alleviate some of these issues and a bit of time the rest, but the bottom line is that the company needs to deliver on the promise of Qsymia being a blockbuster.
Arena Pharmaceuticals (ARNA) also reported earnings but it hardly allows for comparing the two due to the fact that they are not selling yet. The drug is safer here, but results are not as great which has led some to believe that this would be the first drug to be subscribed and if it did not work, then Vivus's Qsymia would get a chance. The first quarter 2013 will be the quarter to watch. Arena also announced that they have a partner for South Korea, whereby Arena will manufacture and sell the drug to Ildong Pharmaceutical Company for distribution in the company. The drug still must be approved by the proper authorities in South Korea.
Investors saw Rosetta Genomics (ROSG) rise $0.6901 (17.30%) to close at $4.68/share after the state of New York gave final approval for the company's miRview lung assay which was previously issued conditional approval. Rosetta Genomics' miRview can differentiate between four types of lung cancers using small samples of lung cancer cells. We would caution readers not to get to excited as this was already approved for use in the US, and conditionally in New York so any follow through to today's trading will probably be short-lived.