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EXP is a graduate from The University of Wall Street and serves as the CEO / Chief Stock Strategist at EXPstocktrader.com research firm. With over 30 years of trading the market, EXP is an experienced investor using a fundamental and technical approach as a market analyst, chartist, visual... More
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  • Questcor Pharmaceuticals Update Following Its October 2013 Earnings Call 3 comments
    Oct 29, 2013 8:21 PM | about stocks: MNK

    Questcor Pharmaceuticals (QCOR) had very good earnings on Oct. 29, 2013 following the close of the market and the stock spiked as expected after being up $1.76 at the close.... then dropped... then sat at about $72 for a while before the market makers (MM's) dropped their bids down hard.

    Here is the official release:

    Questcor Pharma beats by $0.40, beats on revenues • 4:04 PM

    • Questcor Pharma (QCOR): Q3 EPS of $1.68 beats by $0.40.
    • Revenue of $236.3M (+68% Y/Y) beats by $36.6M. Shares +1.8% AH. (PR)

    Following the release was a scheduled CC lead by the IR people and CEO Bailey. On the call was some talk about an investigation...And I'm assuming this was something that was brought up last year into its marketing practices that has Never evolved into anything other than a tactic that may very well be presented by the Bear Camp?

    For the record....on the unexpected and brisk drop, I was a net BUYER at various levels and did not sell into the close or in AH whatsoever. My network is very heavily invested here (having done extensive DD) and we feel that we are all sitting on a winner into 2014.... not just this quarter... or the past year for that matter but could very well see $90 - $100 before to long with increased progress on its Acthar Gel and increased earnings momentum.

    What we have concluded is that the shorts (20% of the float) are most likely pressuring the government to investigate Questcor for obvious reasons.... to instill fear in its loyal investors. This is what the shorts do, and as you know I do spend a considerable amount of time defending good companies time and time again against this type of activity.

    See if you can follow:
    First, the shorts (who profit from a stock decline) sell short a top performing stock, then get an investigation, and/or place articles about trouble (FEAR) or some other type of nonsensical turmoil, then do whatever they can in an effort to collapse a stock for their financial gain, and then they move on to raid another company. This happens more and more it seems. Defending against this is a full time job.

    I saw the same MM rape job on Vocera (NYSE:VCRA) about 8 months ago on a NICKEL miss (yes, 5 cents) and the shares tubed to $12.50 where it looked like a HUGE opportunity and some of my followers jumped in ....

    The earnings were off by a smidge and the market makers (MMs) used that smidge as an opportunity to literally screw everyone holding because with the stroke of a keyboard they can set the prices when folks are screaming for help.

    As a general rule, here is what we do in this situations is:

    1) Stay Calm
    2) Buy The Fear on solid companies

    What has transpired since the MM rape job on VCRA?

    See for yourself. I see a significant bounce and Channel Up.

    (click to enlarge)

    What's Next?

    Moving forward, I suspect that we should get some analyst support (upgrades) on Questcor (QCOR) and this communication will in most probabilities soon be cleared up. I believe that we may see a few good upgrades in the next few days that will overshadow the work of these shorts.

    Please remember that in these instances of Bear Raids...Fundamentals will prevail and increased earnings should eventually drive the stock higher.

    In the meantime, stay tuned and I will try to keep you all informed about what is going on and I do believe that this too shall pass sooner than later.

    Here is the earnings call transcript:

    Disclosure: I am long QCOR.

    Stocks: MNK
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Comments (3)
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  • russellb73
    , contributor
    Comments (394) | Send Message
    What I fined amusing is that I have been following QCOR for about a year and knew about this investigation for about a year....why it is suddenly news is beyond me. It is mildly concerning that another DA office has joined the investigation and the company made the comment probably to protect themselves from lawsuits in case the DA offices ever find anything...Really there is some "smoke" but can't see the "fire". Shorts may have something but on QCOR side seems like DA should have found something by now. Outcomes though still make QCOR look like a huge buy (yes the may pay a huge fine for improper marketing practices...happens in Pharma business...but so what...did you see the earnings???).


    Long QCOR
    29 Oct 2013, 09:30 PM Reply Like
  • pharmaman58
    , contributor
    Comments (97) | Send Message
    Here is my take on this latest QCOR turn of events. First the statement:


    "We would like to also let you know that Questcor has been verbally informed by the U.S. Attorney's office in Philadelphia that the USAO for the Southern District of New York and Los Angeles office of the Securities and Exchange Commission are also participating in the ongoing investigation by the USAO in Philadelphia. Questcor is cooperating with these groups and understand that this type of development is not uncommon in investigations like these. Questcor's Form 10Q is scheduled to be filed tomorrow; we will
    also disclose this development."


    Of note:
    1. "Questcor has been verbally informed".
    Verbally? No formal communication as of this date?
    In other words, the offices are splitting up the investigation workload or they have decided to interview docs or related parties in various areas of the country. If this were a significant change or an expansion of the investigation, Questcor would have received more than "verbal" communication.
    2. "This type of development is not uncommon in investigations like these".
    I take Questcor literally here. They would not have used this statement without corroboration from their own attorneys or from the investigating bodies. In other words, this is business as usual when investigating a company with the geographic reach of Questcor.
    3. Why the Los Angeles office of the SEC?
    The USAO likely called them in for some specific input in one securities area or another, or perhaps because of their geographic proximity to Questcor operations, or because the shorts hounded the SEC to investigate.


    *Conclusion: At worst, the participation by these other offices may mean the Philly USAO found cause to expand the investigation. But more likely this is no news at all. *
    30 Oct 2013, 06:39 AM Reply Like
  • EXPstocktrader
    , contributor
    Comments (388) | Send Message


    Oppenheimer & Co Inc. 85 Broad Street, New York, NY 10004


    Stock Price Performance Company Description
    Questcor Pharmaceuticals is a specialty pharmaceutical company that markets H.P. Acthar Gel for a variety of indications.




    Stock Rating:OUTPERFORM 12-18 mo. Price Target $90.00
    QCOR - NASDAQ $69.73
    3-5 Yr. EPS Gr. Rate 31%
    52-Wk Range $74.76-$21.53
    Shares Outstanding 61.5M
    Float 51.6M
    Market Capitalization $4,183.4M
    Avg. Daily Trading Volume 1,934,707
    Dividend/Div Yield $0.80/1.15%
    Book Value $1.52
    Fiscal Year Ends Dec
    2013E ROE 26.0 %
    LT Debt $15.1M
    Preferred NA
    Common Equity $98,265M
    Convertible Available No
    Diluted Q1 Q2 Q3 Q4 Year Mult.
    2011A 0.20 0.23 0.37 0.47 1.21 57.6x
    2012A 0.61 0.69 0.97 1.09 3.33 20.9x
    2013E 0.76A 1.35A 1.68A 1.60 5.41 12.9x
    Prior (E) -- -- 1.12 1.25 4.48 NM
    2014E -- -- -- -- 6.20 11.2x
    Prior (http://bit.ly/ruNT2D) -- -- -- -- 5.33 NM
    ($/mil) Q1 Q2 Q3 Q4 Year Mult.
    2011A -- -- -- -- 218.2 11.6x
    2012A 96.0 112.5 140.3 160.5 509.3 5.0x
    2013E 135.1A 184.6A 236.3 249.0 805.0 3.1x
    Prior (http://bit.ly/ruNT2D) -- -- 199.0 212.9 731.5 NM
    2014E -- -- -- -- 996.2 2.5x
    Prior (http://bit.ly/ruNT2D) -- -- -- -- 917.9 NM


    Questcor Pharmaceuticals Strong 3Q13 Beat vs. Investigation Update; Raise PT to $90


    Questcor reported 3Q13 adj. EPS of $1.68, well above our $1.12 est., and total revenues of $236M, vs. our consensus-matching $199M est., driven by stellar Acthar performance in rheumatology. The outperformance was overshadowed by an update to the ongoing government investigation which the company positioned as mostly routine. We believe the 3Q beat outweighs the incremental risk. Even after docking $1B from our valuation to account for the uncertainty, QCOR remains significantly undervalued at current levels, in our view. Our new $90 PT (was $73) accounts for increased near/long-term Acthar estimates offset by (admittedly oversized) $1B potential fine and/or disruption as a result of the ongoing DOJ investigation.


    ■ Rheumatology and IS drive top-line beat. Rheumatology revenues of ~$56M
    were well ahead of our $39M estimate, driven by strength across all three indications (DM/PM, RA, Lupus). Of note, IS revenues of ~$22M exceeded our ~ $13M estimate; however, we note that IS revenues are historically volatile given the nature of the indication.
    ■ Investigation development weighs on stock, limited commentary. The US Attorney's Office of NY and of LA have both joined the ongoing investigation into QCOR's marketing practices, the announcement of which weighed on shares after the close. We continue to have limited clarity into the investigation and do not expect QCOR's 10-Q to provide additional insight.
    ■ Volatility around shares represents opportunity. Despite strong results QCOR shares traded down after-market. We view weakness as a buying opportunity as QCOR continues to deliver exceptional results on a consistent basis. While we acknowledge the risks associated with the investigation, we believe shares remain attractive, even in the face of a potential fine.
    ■ Raising PT to $90; reiterate Outperform. We are increasing our estimates and PT to reflect improved growth trajectory for Acthar, mainly in rheumatology.


    Our updated estimates include 2013 revenues of $805 (from $732M) and 2014 revenues of $996M (from $918M). Importantly, we do not expect developments on the investigation front to impact commercial operations.
    30 Oct 2013, 08:12 AM Reply Like
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