CTRP and FMCN are two china names that we covered at FilthyRich China names. CTRP and FMCN have been on fire. CTRP is the single best idea for 07 and in matter of 10 months, the stock is generating nearly 90% return for our group. FMCN has been a stellar performer. I initiated this stock in last Nov as an additional China name that will have a great return in 07. Guess what? In just over two months, it has racked up 37% gain. I am in the process of revising the TP for FMCN at a higher level. However, I believe that both names have risen too much too fast ahead of their earning in Feb.
In my investment thesis, I told you guys, CTRP will be able to rack up 40% YOY for next two to three years.
(see http://www.investorhive.com...)
I said the stock could see $70 level sometime in late 07 as the stock will anticipate earning in 08. Here I have assumed that CTRP will generate near $2 EPS in 08 which is aggressive 50% YOY EPS growth rate. Guess what? We are still in Jan of 07 and the stock has already surpassed my target price for 07. I will write before the earning why CTRP may see slightly more challenging business climate in early part of 07. But the bottom line is the stock appears to be run ahead of its fundmamentals.
Same goes for the FMCN. I have initiated the stock with TP of $80. Now that the stock is at $85, the stock price is starting to account for the great growth that we will see in 08.
(see http://www.investorhive.com...)
I do believe that FMCN will trade much higher from the current level ultimately as 09 earning will show tremendous growth over 08 and the valuation is not as stretched as CTRP case. However, due to its recent rise, the stock clearly needs to consolidate. I will highlight more about FMCN ahead of the earning too in the near future.
I would be a little cautious about the Chinese stock market short term. I believe that the rise in Chinese market last 6 months has been nothing but fireworks. It needs a period of consolidation, which will set up nicely for additional gain in 07. I do believe that we can take certain portion off the table as the gains in both names have been impressive.
(see 5 year chart for Shanghai index, a little scary isn't it?) (http://finance.yahoo.com...)
I would look to buy back CTRP in mid 60's range. I would buy back FMCN in high 70's range. It is time to lock in some profit (suggest 30 to 40%) and we will buy back at cheaper levels. You let the remaining shares fly. This way you may be happy whether the stock moves up or down.
The current stocks in that I cover are: Filthy Rich Tech ideas (comprised of Openwave, Avid Technology, Tivo, IBM, and Research in Motion), Filthy Rich Biotech ideas (comprised of Amgen, Celgene, Genzyme, Isis pharmaceuticals, Alnylam pharmaceutical, and Protein Design Lab), Filthy Rich Financial ideas (JP Morgan and Goldman Sachs), Filthy Rich China ideas (Focus Media Holding and Ctrip.com), Filthy Rich Transportation ideas ( American Airline and Southwest Airline), and Filthy Rich Specialty Retail ideas (Peet's coffee)
Please check out the archives for past posting on individual stocks. Also market commentary and weekly communication on the core holding list are available at www.investorhives.com on a membership basis. The membership is free for everyone. Simply apply for filthyrich hive membership at www.investorhives.com. Thank you for visiting my blog.
Wednesday, January 31, 2007
Wednesday, January 17, 2007
LUV: buy on the dip and buy as it rise.
LUV (SouthWest Airline) is a superb regional carrier that has one of the best operational efficiency and cost structure to maximize the profitability. LUV reports earning tomorrow morning. Regardless of the earning outcome, I think you should buy LUV. I expect moderate uptick in the share price in the morning once the company reports the earning. The company is expected to report 13 cents based on 2.28 B topline number. I expect the company to at least meet or exceed the estimate by a penny.
LUV ,in my opinion, has been unjustifiably punished for being the best in its class. While other legacy carriers have been fighting high fuel price last three years, smart LUV management team hedged the fuel price at much lower level than the market price. This hedging helped the company to withstand the negative impact of the elevated fuel cost and sustain the profitability at a remarkable level at a time other legacy carriers are fighting for their lives.
Ironically this smart hedging of the fuel is currently seen as a negative catalyst for LUV shares as the crude oil price is now dropping. While other legacy carriers will hugely increase its profitability, LUV is seen to be the less beneficiary of the lower fuel price; it is already enjoying the hedged fuel price of $49 ( ~ 85% of the fuel needs). Because this perception is moving investors out of LUV into legacy carriers such as AMR and CAL, LUV PE multiple has been shrinking while the company continues to achieve its best profitability performance.
I see LUV earning continuing to rise. LUV has been expanding its network footage in the US and is likely to see higher traffic volume. Also airfares have been slowly inching up, possibly giving better margin per traveler. Finally lower oil price still benefit LUV with un-hedged 15% of the fuel needs.
While LUV has enjoyed PE of anywhere between 24 to 40 times as a best airline carrier past three years, the PE multiple currently has shrunk to level just above 15 based on 2007 earning. I believe that PE multiple will likely to expand to at least 20 based on improved investor sentiment in the airline sector. Earning is likely to see slight upside to the consensus estimate of roughly $1. So taking $1.1 with PE of 20 yields the fair value of $22. I currently have my TP set at $21 for LUV. Consequently, there is still plenty of upside left from the current level of $16 and a change. And you don¡¯t have to worry about the direction of the fuel price so much with LUV, something that legacy carriers are not able to match. Consequently, I want you to take a position with LUV and enjoy the friendly ride.
The current stocks in that I cover are: Filthy Rich Tech ideas (comprised of Openwave, Avid Technology, Tivo, IBM, and Research in Motion), Filthy Rich Biotech ideas (comprised of Amgen, Celgene, Genzyme, Isis pharmaceuticals, Alnylam pharmaceutical, and Protein Design Lab), Filthy Rich Financial ideas (JP Morgan and Goldman Sachs), Filthy Rich China ideas (Focus Media Holding and Ctrip.com), Filthy Rich Transportation ideas ( American Airline and Southwest Airline), and Filthy Rich Specialty Retail ideas (Peet's coffee)
Please check out the archives for past posting on individual stocks. Also analysis is available at www.investorhives.com under FilthyRich hive. Thank you for visiting my blog.
LUV ,in my opinion, has been unjustifiably punished for being the best in its class. While other legacy carriers have been fighting high fuel price last three years, smart LUV management team hedged the fuel price at much lower level than the market price. This hedging helped the company to withstand the negative impact of the elevated fuel cost and sustain the profitability at a remarkable level at a time other legacy carriers are fighting for their lives.
Ironically this smart hedging of the fuel is currently seen as a negative catalyst for LUV shares as the crude oil price is now dropping. While other legacy carriers will hugely increase its profitability, LUV is seen to be the less beneficiary of the lower fuel price; it is already enjoying the hedged fuel price of $49 ( ~ 85% of the fuel needs). Because this perception is moving investors out of LUV into legacy carriers such as AMR and CAL, LUV PE multiple has been shrinking while the company continues to achieve its best profitability performance.
I see LUV earning continuing to rise. LUV has been expanding its network footage in the US and is likely to see higher traffic volume. Also airfares have been slowly inching up, possibly giving better margin per traveler. Finally lower oil price still benefit LUV with un-hedged 15% of the fuel needs.
While LUV has enjoyed PE of anywhere between 24 to 40 times as a best airline carrier past three years, the PE multiple currently has shrunk to level just above 15 based on 2007 earning. I believe that PE multiple will likely to expand to at least 20 based on improved investor sentiment in the airline sector. Earning is likely to see slight upside to the consensus estimate of roughly $1. So taking $1.1 with PE of 20 yields the fair value of $22. I currently have my TP set at $21 for LUV. Consequently, there is still plenty of upside left from the current level of $16 and a change. And you don¡¯t have to worry about the direction of the fuel price so much with LUV, something that legacy carriers are not able to match. Consequently, I want you to take a position with LUV and enjoy the friendly ride.
The current stocks in that I cover are: Filthy Rich Tech ideas (comprised of Openwave, Avid Technology, Tivo, IBM, and Research in Motion), Filthy Rich Biotech ideas (comprised of Amgen, Celgene, Genzyme, Isis pharmaceuticals, Alnylam pharmaceutical, and Protein Design Lab), Filthy Rich Financial ideas (JP Morgan and Goldman Sachs), Filthy Rich China ideas (Focus Media Holding and Ctrip.com), Filthy Rich Transportation ideas ( American Airline and Southwest Airline), and Filthy Rich Specialty Retail ideas (Peet's coffee)
Please check out the archives for past posting on individual stocks. Also analysis is available at www.investorhives.com under FilthyRich hive. Thank you for visiting my blog.
AMR: On fire but expect a little sale tomorrow.
AMR (American Airline) is part of the six new stocks added for 2007 ideas. At that time, I contended that oil price in 2007 will be substantially lower than the price in 2006. As airline companies would be primary beneficiaries of this trend, I recommended two airline carriers: AMR, legacy carriers with great operating leverage, coming from lower fuel price and LUV, a regional carrier with superb operational performance.
(See our 2007 ideas http://www.investorhives.com...)
I have been watching AMR when it was trading around $28 and started to take a small position. At the price of $32.32, we have initiated the stock to the core holding list on 11/09/07. The stock has been on a tear (happy for our group members) with 25% gain based on today's closing price of $40.23.
AMR is heading into much better business climate as it exits the worst industry condition that lasted 2002 through 2005. Terrorist attack and heighten security measures at the airports severely impacted the air travels. Sky rocketing oil price have decimated the profitability. Several airline companies went bankrupt and AMR almost followed the suit.
As the company survived the one of the most tough business environment, it cleaned up a great deal of operational inefficiencies, successfully completing incredible number of cost saving initiatives. Now the company is leaner than ever with better terms of its labor union. Furthermore, now the fuel price is dropping precipitously with crude falling decidedly below $55 level (now close to $50). This is creating the most exciting prospect for the increased profitability. Most of the analysts recently upgraded the stock target price for AMR based on lower price of oil. Their crude price assumption in their model is still around high $50 ($57 ~ $59). At this crude price level, EPS estimate for AMR ranges from $5 ~ $6. Although the stock had a huge run, if the fuel price stays at the level suggested by the analyst crude assumption, PE multiple is still reasonable at around 7 to 8 (airline PE multiple tends to be low, anywhere between 5 to 15 historically).
I am very bullish on AMR because I think oil price will stay even lower than what analysts are using in their revised model. I believe oil may be trading in the range of high $40 and mid $50 in 07. This may increased the EPS to anywhere between $7 to $8 range and if the same multiple is applied, the stock could trade as high as $60 level. So long term, I think AMR is a definite buy.
As for tomorrow, when the company reports the earning after the market close, I expect a little sell-off. I expect that the company may report slight loss and still provide cautious stance on the fuel price based on the volatile nature of the oil price. In addition, last month, the company indicated the traffic number for Dec may not have been strong as originally forecasted (possible due to weather related delays especially in Colorado). Also there is a possibility that the company hedged the fuel price at higher level and may not benefit from the lower crude price immediately. For these reason, I see unfavorable risk to award scenario for AMR heading into earning. As a result, I want you to take about 30 to 40% of your AMR holding off the table ahead of earning.
Long term, I remain optimistic about the company business prospect. Should there be a pullback in the share price as I see it happening, you need to step up and grab some AMR shares.
The current stocks in that I cover are: Filthy Rich Tech ideas (comprised of Openwave, Avid Technology, Tivo, IBM, and Research in Motion), Filthy Rich Biotech ideas (comprised of Amgen, Celgene, Genzyme, Isis pharmaceuticals, Alnylam pharmaceutical, and Protein Design Lab), Filthy Rich Financial ideas (JP Morgan and Goldman Sachs), Filthy Rich China ideas (Focus Media Holding and Ctrip.com), Filthy Rich Transportation ideas ( American Airline and Southwest Airline), and Filthy Rich Specialty Retail ideas (Peet's coffee)
Please check out the archives for past posting on individual stocks. Also analysis is available at www.investorhives.com under FilthyRich hive. Thank you for visiting my blog.
(See our 2007 ideas http://www.investorhives.com...)
I have been watching AMR when it was trading around $28 and started to take a small position. At the price of $32.32, we have initiated the stock to the core holding list on 11/09/07. The stock has been on a tear (happy for our group members) with 25% gain based on today's closing price of $40.23.
AMR is heading into much better business climate as it exits the worst industry condition that lasted 2002 through 2005. Terrorist attack and heighten security measures at the airports severely impacted the air travels. Sky rocketing oil price have decimated the profitability. Several airline companies went bankrupt and AMR almost followed the suit.
As the company survived the one of the most tough business environment, it cleaned up a great deal of operational inefficiencies, successfully completing incredible number of cost saving initiatives. Now the company is leaner than ever with better terms of its labor union. Furthermore, now the fuel price is dropping precipitously with crude falling decidedly below $55 level (now close to $50). This is creating the most exciting prospect for the increased profitability. Most of the analysts recently upgraded the stock target price for AMR based on lower price of oil. Their crude price assumption in their model is still around high $50 ($57 ~ $59). At this crude price level, EPS estimate for AMR ranges from $5 ~ $6. Although the stock had a huge run, if the fuel price stays at the level suggested by the analyst crude assumption, PE multiple is still reasonable at around 7 to 8 (airline PE multiple tends to be low, anywhere between 5 to 15 historically).
I am very bullish on AMR because I think oil price will stay even lower than what analysts are using in their revised model. I believe oil may be trading in the range of high $40 and mid $50 in 07. This may increased the EPS to anywhere between $7 to $8 range and if the same multiple is applied, the stock could trade as high as $60 level. So long term, I think AMR is a definite buy.
As for tomorrow, when the company reports the earning after the market close, I expect a little sell-off. I expect that the company may report slight loss and still provide cautious stance on the fuel price based on the volatile nature of the oil price. In addition, last month, the company indicated the traffic number for Dec may not have been strong as originally forecasted (possible due to weather related delays especially in Colorado). Also there is a possibility that the company hedged the fuel price at higher level and may not benefit from the lower crude price immediately. For these reason, I see unfavorable risk to award scenario for AMR heading into earning. As a result, I want you to take about 30 to 40% of your AMR holding off the table ahead of earning.
Long term, I remain optimistic about the company business prospect. Should there be a pullback in the share price as I see it happening, you need to step up and grab some AMR shares.
The current stocks in that I cover are: Filthy Rich Tech ideas (comprised of Openwave, Avid Technology, Tivo, IBM, and Research in Motion), Filthy Rich Biotech ideas (comprised of Amgen, Celgene, Genzyme, Isis pharmaceuticals, Alnylam pharmaceutical, and Protein Design Lab), Filthy Rich Financial ideas (JP Morgan and Goldman Sachs), Filthy Rich China ideas (Focus Media Holding and Ctrip.com), Filthy Rich Transportation ideas ( American Airline and Southwest Airline), and Filthy Rich Specialty Retail ideas (Peet's coffee)
Please check out the archives for past posting on individual stocks. Also analysis is available at www.investorhives.com under FilthyRich hive. Thank you for visiting my blog.
JPM: Own ahead of the earning tomorrow morning.
JPM is reporting earning pre-market tomorrow. The company is expected to deliver 16 B in revenue. The bottom-line consensus number is currently at 95 cents according to Yahoo estimate. The consensus estimate has been rising as investors have been expecting favorable result from Investment Banking area.
I expect the company to deliver about 1 to 2 cents above the EPS estimate. However, this will be good enough for the company to pave its way to break above $50 level. This is not a volatile stock and should provide you with solid exposure to the financial sector. The reason for my optimism is the pessimistic stance that Wall Street is taking on the banking sector in general. The banking sector has been facing inverted yield curve and extremely compressed NIM (Net Interest Margin). As a result, investors expect that consumer banking segment business of JPM will drag down JPM's earning. Also, investors realize that last Q IB (Investment Banking) revenue included one time large gain from Amaranth hedge fund asset selling. This Q, gain of this nature is likely to be absent and investors are wondering how the company would fare in IB side compared to the last Q. In addition, continued downfall in the housing sector is also likely to pressure JPM's mortgage business. Overall, investors are very cautious heading into the earning given 10% premium of JPM PE valuation compared to its peers such as C and BAC. Earning expectation, as a result, is somewhat subdued and JPM may not have to deliver the earning that far exceeds the consensus estimate for the shares to establish upward trend.
In my opinion, JPM has several areas where the earning surprise may happen. Last Q was the exceptionally strong for M&A activities. You recall investors were disappointed by Goldman Sachs IB earning during this exceptionally strong time where private equity and M&A activates were at a record pace. Guess who was second just behind GS in M&A deals. It is JPM. I believe JPM IB business could deliver moderate upside for the investors. In addition, consumer spending continues to be brisk. JPM's credit card business is solid, helping the company to achieve higher than expected bottom-line performance. JPM has a very low exposure to sub-prime loan business. As such, mortgage business steep drop may be over-stated. In addition, last Q, the mortgage rate remained well below Fed fund rate as the investors anticipated the Fed rate cut. This may have spurred the mortgage refinance activities and help JPM to offset the weakness in the consumer banking unit.
Overall, I see JPM heading into favorable risk to award situation and I think you should own JPM heading into the earning. If you see weakness in the morning (given INTC earning disappointment), I want you to buy with long term outlook. I continue to see JPM will execute on the operation performance and as the company will exit this harsh period of inverted yield curve by the end of the year, the earning growth will likely to accelerate.
The current stocks in that I cover are: Filthy Rich Tech ideas (comprised of Openwave, Avid Technology, Tivo, IBM, and Research in Motion), Filthy Rich Biotech ideas (comprised of Amgen, Celgene, Genzyme, Isis pharmaceuticals, Alnylam pharmaceutical, and Protein Design Lab), Filthy Rich Financial ideas (JP Morgan and Goldman Sachs), Filthy Rich China ideas (Focus Media Holding and Ctrip.com), Filthy Rich Transportation ideas ( American Airline and Southwest Airline), and Filthy Rich Specialty Retail ideas (Peet's coffee)
Please check out the archives for past posting on individual stocks. Also analysis is available at www.investorhives.com under FilthyRich hive. Thank you for visiting my blog.
I expect the company to deliver about 1 to 2 cents above the EPS estimate. However, this will be good enough for the company to pave its way to break above $50 level. This is not a volatile stock and should provide you with solid exposure to the financial sector. The reason for my optimism is the pessimistic stance that Wall Street is taking on the banking sector in general. The banking sector has been facing inverted yield curve and extremely compressed NIM (Net Interest Margin). As a result, investors expect that consumer banking segment business of JPM will drag down JPM's earning. Also, investors realize that last Q IB (Investment Banking) revenue included one time large gain from Amaranth hedge fund asset selling. This Q, gain of this nature is likely to be absent and investors are wondering how the company would fare in IB side compared to the last Q. In addition, continued downfall in the housing sector is also likely to pressure JPM's mortgage business. Overall, investors are very cautious heading into the earning given 10% premium of JPM PE valuation compared to its peers such as C and BAC. Earning expectation, as a result, is somewhat subdued and JPM may not have to deliver the earning that far exceeds the consensus estimate for the shares to establish upward trend.
In my opinion, JPM has several areas where the earning surprise may happen. Last Q was the exceptionally strong for M&A activities. You recall investors were disappointed by Goldman Sachs IB earning during this exceptionally strong time where private equity and M&A activates were at a record pace. Guess who was second just behind GS in M&A deals. It is JPM. I believe JPM IB business could deliver moderate upside for the investors. In addition, consumer spending continues to be brisk. JPM's credit card business is solid, helping the company to achieve higher than expected bottom-line performance. JPM has a very low exposure to sub-prime loan business. As such, mortgage business steep drop may be over-stated. In addition, last Q, the mortgage rate remained well below Fed fund rate as the investors anticipated the Fed rate cut. This may have spurred the mortgage refinance activities and help JPM to offset the weakness in the consumer banking unit.
Overall, I see JPM heading into favorable risk to award situation and I think you should own JPM heading into the earning. If you see weakness in the morning (given INTC earning disappointment), I want you to buy with long term outlook. I continue to see JPM will execute on the operation performance and as the company will exit this harsh period of inverted yield curve by the end of the year, the earning growth will likely to accelerate.
The current stocks in that I cover are: Filthy Rich Tech ideas (comprised of Openwave, Avid Technology, Tivo, IBM, and Research in Motion), Filthy Rich Biotech ideas (comprised of Amgen, Celgene, Genzyme, Isis pharmaceuticals, Alnylam pharmaceutical, and Protein Design Lab), Filthy Rich Financial ideas (JP Morgan and Goldman Sachs), Filthy Rich China ideas (Focus Media Holding and Ctrip.com), Filthy Rich Transportation ideas ( American Airline and Southwest Airline), and Filthy Rich Specialty Retail ideas (Peet's coffee)
Please check out the archives for past posting on individual stocks. Also analysis is available at www.investorhives.com under FilthyRich hive. Thank you for visiting my blog.
Monday, January 15, 2007
Biotech Milestone preview (6): ALNY
In previewing ALNY, let me describe the way biotech companies can be categorized. First group of companies are FDA approval driven group. Many of the large biotech cap companies such as DNA, AMGN, GENZ, and CELG falls into this category. They already have gone through creative research development stage and have been using the developed technology (cutting, I might add) to address many of the human diseases. For these companies, successful development of the late stage pipeline and the large market size that these pipeline addresses are the key in getting the higher multiple that will push the share price higher.
In the second category of companies, earning outlook and the pipeline story may not be so critical. This is because these companies often possess methods to develop the drug that will revolutionize the industry. You recall in late 1990's, CRA and handful of other companies came up with technology to decode DNA structures. Although they had no products what-so-ever, the prospect of revolutionizing the drug development industry propels these stocks to the moon. Most of these companies racked up gains as large as 1000% in matter of less than a year.
Many of the current oncology drugs are based on technology to suppress the blood vessel formation that nourishes the cancer cells. DNA's blockbuster Avastin and AMGN upcoming cancer drug Vectibix works on the similar principle. These cancer drugs clearly are superior to conventional cancer drug which are only based on chemical compositions that introduces the harmful side effects. However, they are still with potent side effects and may not address all types of cancer tumors as some are still able to grow under current therapy regime.
ALNY's RNAi technology will take cancer and other drug development process to the next level and in my opinion is truly revolutionary in nature. Thus, without the firm emerging drug pipeline, I am speculating that ALNY will grab investors' attention. RNA plays a role of a messenger in duplicating DNA structure to produce protein blocks, which are fundamental units of the living cells. If cancer cell DNA is decoded and RNAi technology is used to suppress the formation of the relevant cancer cells, the malignant tumor is not going to grow. ALNY's RNAi technology thus may result in highly personalized cancer treatment in which each patient cancer cells may be biopsy and RNAi technology can be applied to the unique cancer cell structure of each patients. Thus RNAi drug targets only cancer cells, resulting in minimal side effects.
ALNY owns vast array of IP in RNAi technology. I am speculating that RNA field will garner more and more attention from biotech investors and large pharma and biotech companies will be on the hunt for this technology for M&A opportunities. This forms my basis for my speculative investment thesis with ALNY. Again, ALNY pipeline is at its infancy as most of them are in a preclinical stage. However, its technology can be applied to wide array of diseases with fewer side effects.
Description.
RNA-interference (RNAi). Phase I study with an inhaled formulation of ALN-RSV01 for the treatment of Respiratory Syncytial Virus (RSV) infections. Initiated a human experimental infection/viral challenge study in RSV with inhaled ALN-RSV01. In 2005, company signed multiple deals and IP licenses, including RNAi development alliance with Novartis, and collaborations with Medtronic and the Cystic Fibrosis Foundation.
Milestone Events.
1Q07: ALN-FLU01 IND filing
1H07: ALN-RSV01 phase I inhalation safety study results
1H07: ALN-RSV01 phase II initiation in naturally infected patients (inhalation)
My Take.
Ultimate speculation play with "hot" upside potential. Pipeline story may not be as important as the acceptance of RNAi technology in the biotech industry. Recommend putting less than 5% of your speculative money with ALNY.
The current stocks in that I cover are: Filthy Rich Tech ideas (comprised of Openwave, Avid Technology, Tivo, IBM, and Research in Motion), Filthy Rich Biotech ideas (comprised of Amgen, Celgene, Genzyme, Isis pharmaceuticals, Alnylam pharmaceutical, and Protein Design Lab), Filthy Rich Financial ideas (JP Morgan and Goldman Sachs), Filthy Rich China ideas (Focus Media Holding and Ctrip.com), Filthy Rich Transportation ideas ( American Airline and Southwest Airline), and Filthy Rich Specialty Retail ideas (Peet's coffee)
Please check out the archives for past posting on individual stocks. Also analysis is available at www.investorhives.com under FilthyRich hive. Thank you for visiting my blog.
In the second category of companies, earning outlook and the pipeline story may not be so critical. This is because these companies often possess methods to develop the drug that will revolutionize the industry. You recall in late 1990's, CRA and handful of other companies came up with technology to decode DNA structures. Although they had no products what-so-ever, the prospect of revolutionizing the drug development industry propels these stocks to the moon. Most of these companies racked up gains as large as 1000% in matter of less than a year.
Many of the current oncology drugs are based on technology to suppress the blood vessel formation that nourishes the cancer cells. DNA's blockbuster Avastin and AMGN upcoming cancer drug Vectibix works on the similar principle. These cancer drugs clearly are superior to conventional cancer drug which are only based on chemical compositions that introduces the harmful side effects. However, they are still with potent side effects and may not address all types of cancer tumors as some are still able to grow under current therapy regime.
ALNY's RNAi technology will take cancer and other drug development process to the next level and in my opinion is truly revolutionary in nature. Thus, without the firm emerging drug pipeline, I am speculating that ALNY will grab investors' attention. RNA plays a role of a messenger in duplicating DNA structure to produce protein blocks, which are fundamental units of the living cells. If cancer cell DNA is decoded and RNAi technology is used to suppress the formation of the relevant cancer cells, the malignant tumor is not going to grow. ALNY's RNAi technology thus may result in highly personalized cancer treatment in which each patient cancer cells may be biopsy and RNAi technology can be applied to the unique cancer cell structure of each patients. Thus RNAi drug targets only cancer cells, resulting in minimal side effects.
ALNY owns vast array of IP in RNAi technology. I am speculating that RNA field will garner more and more attention from biotech investors and large pharma and biotech companies will be on the hunt for this technology for M&A opportunities. This forms my basis for my speculative investment thesis with ALNY. Again, ALNY pipeline is at its infancy as most of them are in a preclinical stage. However, its technology can be applied to wide array of diseases with fewer side effects.
Description.
RNA-interference (RNAi). Phase I study with an inhaled formulation of ALN-RSV01 for the treatment of Respiratory Syncytial Virus (RSV) infections. Initiated a human experimental infection/viral challenge study in RSV with inhaled ALN-RSV01. In 2005, company signed multiple deals and IP licenses, including RNAi development alliance with Novartis, and collaborations with Medtronic and the Cystic Fibrosis Foundation.
Milestone Events.
1Q07: ALN-FLU01 IND filing
1H07: ALN-RSV01 phase I inhalation safety study results
1H07: ALN-RSV01 phase II initiation in naturally infected patients (inhalation)
My Take.
Ultimate speculation play with "hot" upside potential. Pipeline story may not be as important as the acceptance of RNAi technology in the biotech industry. Recommend putting less than 5% of your speculative money with ALNY.
The current stocks in that I cover are: Filthy Rich Tech ideas (comprised of Openwave, Avid Technology, Tivo, IBM, and Research in Motion), Filthy Rich Biotech ideas (comprised of Amgen, Celgene, Genzyme, Isis pharmaceuticals, Alnylam pharmaceutical, and Protein Design Lab), Filthy Rich Financial ideas (JP Morgan and Goldman Sachs), Filthy Rich China ideas (Focus Media Holding and Ctrip.com), Filthy Rich Transportation ideas ( American Airline and Southwest Airline), and Filthy Rich Specialty Retail ideas (Peet's coffee)
Please check out the archives for past posting on individual stocks. Also analysis is available at www.investorhives.com under FilthyRich hive. Thank you for visiting my blog.
Sunday, January 14, 2007
Weekly communication on core ideas - 1/14/07
The market remains extremely strong. I have anticipated the market correction after the earning season but the oil price drop and fall in the commodity price may delay this correction further. Fed is likely to continue to stay on the side with the rate policy. The economy is expected to moderate: but if the energy and commodity price stays low, the corporate America can continue to report robust earning growth as they can create goods at lower cost and thereby maintain higher profitability level. Next week is packed with important economic numbers that includes CPI and PPI. If the economic indicators continue to picture moderating economy with benign inflation, the market will go into the state of nirvana and we are likely to continue to set new highs in major indexes.
I want you to be invested in the market. However, I would set aside some cash to make sure you have money to put to work when we have a correction. I expect correction will be relatively short-lived but it will be painful if there is one. Most important thing the market needs to have to sustain this rally is the low energy and commodity price. So we need to pay very close attention to the movement of the energy and commodity price. But for now, I remain fairly optimistic about the short term market outlook. But expect choppy action. Any signs of higher inflation could trigger sell-off and we may just get that next week. Long term, I am very bullish about 2007. 2007 may turn out to be the best year since the internet bubble market correction in 2000.
Let us walk through individual names in the filthyrich stock list. Starting with the biotech names, AMGN is a strong buy at the current level. I expect the earning results in late January will be another outstanding performance. The stock should trend higher soon. CELG is consolidating and offers a great chance to add. CELG is a buy. GENZ is another outstanding buy at the current level. PDLI lacks near term catalysts to push share price higher and it is a good accumulate. Build position with PDLI. ISIS and ALNY are both speculative buys. They should not exceed 5% of your entire holding.
Financial names continue to remain strong. GS has hit another all time high level. The stock is still undervalued and is a strong buy. JPM is nearing its 52 week high level. It is reporting earning next week. I will preview the earning. If the earning comes out well, we may finally break above $50 level. It is heading into low expectation environment, and I want you to buy ahead of the earning. I will preview about JPM in coming article.
China names are incredibly strong. CTRP is nearing another 52 week high level. It had run up huge. Use the weakness to add. CTRP is the single best idea for 2007. FMCN is nearing my target price after being listed in 2007 idea just one month ago. Believe it or not, the stock may continue to trend higher. There is incredible excitement over Chinese display ad market and the PE multiple is still compressed compared to other Chinese internet names. FMCN should be bought only on pullbacks as it had a huge gain. Long term, I am very bullish about the company.
We had incredible strength in the transportation stocks. AMR is benefiting from falling oil price and has been setting 52 week high all throughout this week. AMR is reporting earning next week and we may see a little sell-off after the earning. I want you to accumulate shares if we see such pullback. In my opinion, energy price may continue to falter below $50 level; AMR may soon reach my target price soon. LUV is finally breaking out. I believe LUV can be bought right now. It is a great buy. LUV deserves higher multiple. It also reports earning this week and I will highlight it along with AMR.
Moving onto tech names, IBM is a great buy. It also reports earning next week. SAP and ORCL earning has been disappointing and many investors believe IBM will follow the suit. I think IBM has gained market share in the database market. In addition, its chip design business in GPU sector could bring in extremely strong earning as game console sales remained very hot this holidays. IBM is another stock that has hit 52 week high this week. Tivo is a solid buy. I believe that the tax loss season is now gone and the stock should trend higher based on Comcast deployment in March. I believe 2007 will be the year for Tivo although 2006 was disappointing for its shareholders. OPWV is a hold. I do not want you to add any additional shares. OPWV is fighting proxy battle as its management has poorly managed this company which has a good market potential. Let us wait until there is more visibility to the business. AVID is hold. As in OPWV, the revenue growth has been disappointing. Industry outlook is still good as HDTV rollout is accelerating but I would wait until the management provides clearer picture on the revenue growth outlook. RIMM is short and I want you to add to your short holding when stock is above $135.
Finally with the specialty retail idea, PEET is accumulate. Coffee business outlook is very good. However, the company is currently spending a lot of income to expand its store counts throughout CA. So the EPS growth may not be as strong as what the market likes. But you should be using this period of consolidation to build position.
Next week, I will publish articles on JPM, IBM, AMR, LUV and semi-equipment names ahead of earning to give you guys some trading ideas. I just hope that I have time to do this.
The current stocks in that I cover are: Filthy Rich Tech ideas (comprised of Openwave, Avid Technology, Tivo, IBM, and Research in Motion), Filthy Rich Biotech ideas (comprised of Amgen, Celgene, Genzyme, Isis pharmaceuticals, Alnylam pharmaceutical, and Protein Design Lab), Filthy Rich Financial ideas (JP Morgan and Goldman Sachs), Filthy Rich China ideas (Focus Media Holding and Ctrip.com), Filthy Rich Transportation ideas ( American Airline and Southwest Airline), and Filthy Rich Specialty Retail ideas (Peet's coffee)
Please check out the archives for past posting on individual stocks. Also analysis is available at www.investorhives.com under FilthyRich hive. Thank you for visiting my blog.
I want you to be invested in the market. However, I would set aside some cash to make sure you have money to put to work when we have a correction. I expect correction will be relatively short-lived but it will be painful if there is one. Most important thing the market needs to have to sustain this rally is the low energy and commodity price. So we need to pay very close attention to the movement of the energy and commodity price. But for now, I remain fairly optimistic about the short term market outlook. But expect choppy action. Any signs of higher inflation could trigger sell-off and we may just get that next week. Long term, I am very bullish about 2007. 2007 may turn out to be the best year since the internet bubble market correction in 2000.
Let us walk through individual names in the filthyrich stock list. Starting with the biotech names, AMGN is a strong buy at the current level. I expect the earning results in late January will be another outstanding performance. The stock should trend higher soon. CELG is consolidating and offers a great chance to add. CELG is a buy. GENZ is another outstanding buy at the current level. PDLI lacks near term catalysts to push share price higher and it is a good accumulate. Build position with PDLI. ISIS and ALNY are both speculative buys. They should not exceed 5% of your entire holding.
Financial names continue to remain strong. GS has hit another all time high level. The stock is still undervalued and is a strong buy. JPM is nearing its 52 week high level. It is reporting earning next week. I will preview the earning. If the earning comes out well, we may finally break above $50 level. It is heading into low expectation environment, and I want you to buy ahead of the earning. I will preview about JPM in coming article.
China names are incredibly strong. CTRP is nearing another 52 week high level. It had run up huge. Use the weakness to add. CTRP is the single best idea for 2007. FMCN is nearing my target price after being listed in 2007 idea just one month ago. Believe it or not, the stock may continue to trend higher. There is incredible excitement over Chinese display ad market and the PE multiple is still compressed compared to other Chinese internet names. FMCN should be bought only on pullbacks as it had a huge gain. Long term, I am very bullish about the company.
We had incredible strength in the transportation stocks. AMR is benefiting from falling oil price and has been setting 52 week high all throughout this week. AMR is reporting earning next week and we may see a little sell-off after the earning. I want you to accumulate shares if we see such pullback. In my opinion, energy price may continue to falter below $50 level; AMR may soon reach my target price soon. LUV is finally breaking out. I believe LUV can be bought right now. It is a great buy. LUV deserves higher multiple. It also reports earning this week and I will highlight it along with AMR.
Moving onto tech names, IBM is a great buy. It also reports earning next week. SAP and ORCL earning has been disappointing and many investors believe IBM will follow the suit. I think IBM has gained market share in the database market. In addition, its chip design business in GPU sector could bring in extremely strong earning as game console sales remained very hot this holidays. IBM is another stock that has hit 52 week high this week. Tivo is a solid buy. I believe that the tax loss season is now gone and the stock should trend higher based on Comcast deployment in March. I believe 2007 will be the year for Tivo although 2006 was disappointing for its shareholders. OPWV is a hold. I do not want you to add any additional shares. OPWV is fighting proxy battle as its management has poorly managed this company which has a good market potential. Let us wait until there is more visibility to the business. AVID is hold. As in OPWV, the revenue growth has been disappointing. Industry outlook is still good as HDTV rollout is accelerating but I would wait until the management provides clearer picture on the revenue growth outlook. RIMM is short and I want you to add to your short holding when stock is above $135.
Finally with the specialty retail idea, PEET is accumulate. Coffee business outlook is very good. However, the company is currently spending a lot of income to expand its store counts throughout CA. So the EPS growth may not be as strong as what the market likes. But you should be using this period of consolidation to build position.
Next week, I will publish articles on JPM, IBM, AMR, LUV and semi-equipment names ahead of earning to give you guys some trading ideas. I just hope that I have time to do this.
The current stocks in that I cover are: Filthy Rich Tech ideas (comprised of Openwave, Avid Technology, Tivo, IBM, and Research in Motion), Filthy Rich Biotech ideas (comprised of Amgen, Celgene, Genzyme, Isis pharmaceuticals, Alnylam pharmaceutical, and Protein Design Lab), Filthy Rich Financial ideas (JP Morgan and Goldman Sachs), Filthy Rich China ideas (Focus Media Holding and Ctrip.com), Filthy Rich Transportation ideas ( American Airline and Southwest Airline), and Filthy Rich Specialty Retail ideas (Peet's coffee)
Please check out the archives for past posting on individual stocks. Also analysis is available at www.investorhives.com under FilthyRich hive. Thank you for visiting my blog.
Saturday, January 13, 2007
Biotech Milestone preview (5): CELG
You guys already know how I feel about CELG as I talked on the company fundamentals on past several articles. CELG is reporting earning in early Feb and I expect some moderate EPS upside with upcoming earning. By the end of Q1, CELG is likely to get Revlimid approval in Europe with MM treatment and possibly with MDS treatment. Revlimid approval in MM is widely expected but faster than expected approval in MDS could fuel upside price movement. Long term, I continue to remain bullish on the company growth outlook although high price of the stock demands diligent investigation and analysis on the business outlook and drug pipeline story.
Description.
Marketed products include: Thalomid, a small molecule immunomodulatory drug (IMiD) marketed for multiple myeloma and other cancers; Revlimid, a 2nd generation IMiD marketed for MDS and multiple myeloma; Alkeran, an alkylating agent (L-phenylalanine mustard) marketed with GSK for multiple myeloma; Focalin/Ritalin products, which are CNS stimulants marketed by Novartis. Pipeline includes Revlimid entering phase III for CLL and NHL; Actimid (CC-4047), an IMiD in phase II for sickle cell anemia, myelofibrosis and solid tumors; CC-10004, an oral TNF-alpha inhibitor in phase II for psoriasis; Benzopyrans (CC-8490), Selective Estrogen Receptor Modulators (SERMS) in phase II with the NCI for glioblastoma; c-Jun N terminal kinase inhibitors in phase I and preclinical for inflammatory diseases and cancer; and SELCID's (Selective Cytokine Inhibitory Drugs) in phase I for asthma and psoriasis.
Milestone events.
YE06/1Q07: Possible interim data from ECOG E4A03 phase III trial with Revlimid in newly diagnosed MM January 2007: Revlimid EMEA approval for 5q- MDS
YE06/1Q07: Initiate Revlimid phase III study in non-5q minus MDS
1Q07: Submit protocol under SPA for Revlimid phase III registration study for NHL
1Q07: Initiate Revlimid phase III trial in R/R CLL
2Q07: Initiate Revlimid phase III trial in R/R NHL
YE06/1Q07: Initiation of Actimid phase II/III trials in myelofibrosis, small cell lung cancer, sickle cell anemia and beta thalessemia
My Take.
Where else can you find the better growth story in biotech? Revlimid takes the company into the hyper-growth stage over next 3 years. Potent pipeline reveals massive untapped market for the company. Afraid of high PE? Then take a look at PEG ratio. Have stomach ulcer medicine for intermittent volatility but the stock will reward you greatly if you stay with it. Another strong buy with $73 PT.
The current stocks in that I cover are: Filthy Rich Tech ideas (comprised of Openwave, Avid Technology, Tivo, IBM, and Research in Motion), Filthy Rich Biotech ideas (comprised of Amgen, Celgene, Genzyme, Isis pharmaceuticals, Alnylam pharmaceutical, and Protein Design Lab), Filthy Rich Financial ideas (JP Morgan and Goldman Sachs), Filthy Rich China ideas (Focus Media Holding and Ctrip.com), Filthy Rich Transportation ideas ( American Airline and Southwest Airline), and Filthy Rich Specialty Retail ideas (Peet's coffee)
Please check out the archives for past posting on individual stocks. Also analysis is available at www.investorhives.com under FilthyRich hive. Thank you for visiting my blog.
Description.
Marketed products include: Thalomid, a small molecule immunomodulatory drug (IMiD) marketed for multiple myeloma and other cancers; Revlimid, a 2nd generation IMiD marketed for MDS and multiple myeloma; Alkeran, an alkylating agent (L-phenylalanine mustard) marketed with GSK for multiple myeloma; Focalin/Ritalin products, which are CNS stimulants marketed by Novartis. Pipeline includes Revlimid entering phase III for CLL and NHL; Actimid (CC-4047), an IMiD in phase II for sickle cell anemia, myelofibrosis and solid tumors; CC-10004, an oral TNF-alpha inhibitor in phase II for psoriasis; Benzopyrans (CC-8490), Selective Estrogen Receptor Modulators (SERMS) in phase II with the NCI for glioblastoma; c-Jun N terminal kinase inhibitors in phase I and preclinical for inflammatory diseases and cancer; and SELCID's (Selective Cytokine Inhibitory Drugs) in phase I for asthma and psoriasis.
Milestone events.
YE06/1Q07: Possible interim data from ECOG E4A03 phase III trial with Revlimid in newly diagnosed MM January 2007: Revlimid EMEA approval for 5q- MDS
YE06/1Q07: Initiate Revlimid phase III study in non-5q minus MDS
1Q07: Submit protocol under SPA for Revlimid phase III registration study for NHL
1Q07: Initiate Revlimid phase III trial in R/R CLL
2Q07: Initiate Revlimid phase III trial in R/R NHL
YE06/1Q07: Initiation of Actimid phase II/III trials in myelofibrosis, small cell lung cancer, sickle cell anemia and beta thalessemia
My Take.
Where else can you find the better growth story in biotech? Revlimid takes the company into the hyper-growth stage over next 3 years. Potent pipeline reveals massive untapped market for the company. Afraid of high PE? Then take a look at PEG ratio. Have stomach ulcer medicine for intermittent volatility but the stock will reward you greatly if you stay with it. Another strong buy with $73 PT.
The current stocks in that I cover are: Filthy Rich Tech ideas (comprised of Openwave, Avid Technology, Tivo, IBM, and Research in Motion), Filthy Rich Biotech ideas (comprised of Amgen, Celgene, Genzyme, Isis pharmaceuticals, Alnylam pharmaceutical, and Protein Design Lab), Filthy Rich Financial ideas (JP Morgan and Goldman Sachs), Filthy Rich China ideas (Focus Media Holding and Ctrip.com), Filthy Rich Transportation ideas ( American Airline and Southwest Airline), and Filthy Rich Specialty Retail ideas (Peet's coffee)
Please check out the archives for past posting on individual stocks. Also analysis is available at www.investorhives.com under FilthyRich hive. Thank you for visiting my blog.
Thursday, January 11, 2007
Biotech Milestones preview (4): ISIS
Throughout 2006, biotech sector has struggled. As money prefer to stay with the commodity and energy, and somewhat in the financial area, the biotech companies' shares have been in a trading range at best. In addition, Democrats' win to secure majority position in the Congress seats stirred investor concern that reformed Medicare program will reduce earning of the large biotech companies. In addition, more stringent FDA standard to approve new drugs reduced the number of drugs approved in 06 compared to 05, deflating the biotech sector sentiment.
I expect in 07, the money that is rotating out of the oil and commodity will find its way into the biotech sector. With large pharma facing their pipeline drying up and their existing drugs facing more generic competitions due to patent expiration, M&A boom may occur in the sector. Large biotech companies are already doing some major acquisition as DNA and AMGN recently have purchased several small biotech companies. Big pharmas are likely to be even more aggressive this year. Given the expected market volatility, I expect investors may prefer large cap biotech names in the first half; however, in the second half, euphoria could spill over to the smaller names. As a leader in the RNA antisense technology, ISIS could be highly coveted by large biotech and pharma companies.
ISIS
Description.
Cancer - antisense (RNA based). Vitravene (fomivirsen) for CMV retinitis in people with AIDS is the first antisense drug to achieve marketing clearance - licensed to Novartis Ophthalmics. Alicaforsen (ISIS 2302), an inhibitor of intercellular adhesion molecule-1, has successfully completed phase II for ulcerative colitis and now seeking to partner; was discontinued for Crohn's disease after disappointing phase III results. Other lead proprietary candidates in clinical development include second-generation antisense products ISIS 113715 (inhibits PTB-1B) in phase II for type 2 diabetes and ISIS 301012 (targets apoB-100 mRNA) in phase II for high cholesterol. Phase II data presented at AHA demonstrated that ISIS 301012 reduced all atherogenic lipids as a single agent and when coadminiatered with statins. OGX-011 (ISIS 112989, inhibitor of Clusterin) is being developed by partner OncoGenex in phase II for prostate, lung, and breast cancers. Multiple additonal compounds in phase I and preclinical. Through Ibis division, developing TIGER biosensor system to identify infectious organisms.
Pipeline Milestones.
YE06/1Q07: Data from ISIS 301012 phase II trial in FH homozygous/heterozygous patients 1H07: FDA meeting to discuss registration path for ISIS 301012
1H07: Data from 400mg cohort in ISIS 301012 phase II trial
1H07: Data from 400mg 5-wk cohort and 200/300mg 12-wk cohort in phase IIa combination trial with statins
My Take.
Only biotech company to successfully market RNA technology into commercial product. Pipeline addresses diverse areas of medical needs that include diabetes, high blood pressure(cholesterol), and cancer. Highly speculative name but worth the speculation due to emerging exciting story in RNA technology. Even without the takeover speculation, the pipeline is worth considering. My price target is $18 with highly speculative buy rating.
The current stocks in that I cover are: Filthy Rich Tech ideas (comprised of Openwave, Avid Technology, Tivo, IBM, and Research in Motion), Filthy Rich Biotech ideas (comprised of Amgen, Celgene, Genzyme, Isis pharmaceuticals, Alnylam pharmaceutical, and Protein Design Lab), Filthy Rich Financial ideas (JP Morgan and Goldman Sachs), Filthy Rich China ideas (Focus Media Holding and Ctrip.com), Filthy Rich Transportation ideas ( American Airline and Southwest Airline), and Filthy Rich Specialty Retail ideas (Peet's coffee)
Please check out the archives for past posting on individual stocks. Also analysis is available at www.investorhives.com under FilthyRich hive. Thank you for visiting my blog.
I expect in 07, the money that is rotating out of the oil and commodity will find its way into the biotech sector. With large pharma facing their pipeline drying up and their existing drugs facing more generic competitions due to patent expiration, M&A boom may occur in the sector. Large biotech companies are already doing some major acquisition as DNA and AMGN recently have purchased several small biotech companies. Big pharmas are likely to be even more aggressive this year. Given the expected market volatility, I expect investors may prefer large cap biotech names in the first half; however, in the second half, euphoria could spill over to the smaller names. As a leader in the RNA antisense technology, ISIS could be highly coveted by large biotech and pharma companies.
ISIS
Description.
Cancer - antisense (RNA based). Vitravene (fomivirsen) for CMV retinitis in people with AIDS is the first antisense drug to achieve marketing clearance - licensed to Novartis Ophthalmics. Alicaforsen (ISIS 2302), an inhibitor of intercellular adhesion molecule-1, has successfully completed phase II for ulcerative colitis and now seeking to partner; was discontinued for Crohn's disease after disappointing phase III results. Other lead proprietary candidates in clinical development include second-generation antisense products ISIS 113715 (inhibits PTB-1B) in phase II for type 2 diabetes and ISIS 301012 (targets apoB-100 mRNA) in phase II for high cholesterol. Phase II data presented at AHA demonstrated that ISIS 301012 reduced all atherogenic lipids as a single agent and when coadminiatered with statins. OGX-011 (ISIS 112989, inhibitor of Clusterin) is being developed by partner OncoGenex in phase II for prostate, lung, and breast cancers. Multiple additonal compounds in phase I and preclinical. Through Ibis division, developing TIGER biosensor system to identify infectious organisms.
Pipeline Milestones.
YE06/1Q07: Data from ISIS 301012 phase II trial in FH homozygous/heterozygous patients 1H07: FDA meeting to discuss registration path for ISIS 301012
1H07: Data from 400mg cohort in ISIS 301012 phase II trial
1H07: Data from 400mg 5-wk cohort and 200/300mg 12-wk cohort in phase IIa combination trial with statins
My Take.
Only biotech company to successfully market RNA technology into commercial product. Pipeline addresses diverse areas of medical needs that include diabetes, high blood pressure(cholesterol), and cancer. Highly speculative name but worth the speculation due to emerging exciting story in RNA technology. Even without the takeover speculation, the pipeline is worth considering. My price target is $18 with highly speculative buy rating.
The current stocks in that I cover are: Filthy Rich Tech ideas (comprised of Openwave, Avid Technology, Tivo, IBM, and Research in Motion), Filthy Rich Biotech ideas (comprised of Amgen, Celgene, Genzyme, Isis pharmaceuticals, Alnylam pharmaceutical, and Protein Design Lab), Filthy Rich Financial ideas (JP Morgan and Goldman Sachs), Filthy Rich China ideas (Focus Media Holding and Ctrip.com), Filthy Rich Transportation ideas ( American Airline and Southwest Airline), and Filthy Rich Specialty Retail ideas (Peet's coffee)
Please check out the archives for past posting on individual stocks. Also analysis is available at www.investorhives.com under FilthyRich hive. Thank you for visiting my blog.
Biotech Milestones preview (3): AMGN
Oil's dip below $52 is extremely bullish for the market. This event allows Fed to ease interest rate this year given more moderate inflation outlook. The money is rotated fast out of the oil and commodity market into tech and biotech names. The market may continue to remain strong if this sharp drop in the energy price is sustained. I want you to buy AMGN ahead of earning on 25th of January. The company is heading into the earning with low expectation and negative sentiment stemming from Roche litigation to defend the EPO franchise. The risk to award ratio is favorable and I see near term strength in the stock. Let us assess what to do just before the earning; till then stay long on AMGN. I believe 2007 will be the year for this stock to finally outshine.
AMGN
Description.
Large Cap biotech that develops proteins, monoclonal antibodies (MAbs) and small molecule drugs in areas including nephrology, cancer, and inflammation. Principle marketed therapeutics are Epogen and Aranesp (anemia), Neupogen and Neulasta (neutropenia), and Enbrel (rheumatoid arthritis and psoriasis). Key late stage pipeline compounds include: Denosumab (AMG-162), a fully human MAb to NF Kappa B (RANK) Ligand, in phase III for treatment and prevention of osteoporosis, non-metastatic prostate androgen ablation, and phase II for breast cancer related bone metastases and rheumatoid arthritis (RA); Vectibix (panitumumab, ABX-EGF), a fully human MAb to epidermal growth factor receptor (EGFr), for 3rd line colorectal cancer (CRC) and phase III with Avastin + chemo for 1st line CRC; AMG-706 kinase/angiogenesis inhibitor in phase II for gastrointestinal stromal tumor (GIST); AMG-531, a novel thrombopoietic in phase III for idiopathic thrombocytopenic purpura ITP; AMG 108, a MAb to IL-1r for inflammatory diseases; AMG 714, an anti-IL15 Ab for rheumatoid arthritis.
Milestone event.
Feb 20, 2007: FDA action for Roche's CERA for CKD anemia
1Q07: Vectibix PACCE (Pmab + Avastin + chemo in colon cancer) RR (January) and PFS data 1H07: Denosumab interim 2-year phase III results in PMO
1Q07: AMG 706 phase II metastatic thyroid cancer data
Mid-07: AMG-531 phase III pre- and post-splenectomy ITP data
2H07: Kepivance phase III oral mucositis data in solid tumors
My Take.
Premiere biotech company that is trading at a ridiculously low PE multiple. Massive stock buyback and more efficient manufacturing abroad will improve earning leverage despite the increased R&D expense. Highly attractive emerging pipeline in oncology area. Be patient and you will be rewarded. Strong buy with target price at $100.
The current stocks in that I cover are: Filthy Rich Tech ideas (comprised of Openwave, Avid Technology, Tivo, IBM, and Research in Motion), Filthy Rich Biotech ideas (comprised of Amgen, Celgene, Genzyme, Isis pharmaceuticals, Alnylam pharmaceutical, and Protein Design Lab), Filthy Rich Financial ideas (JP Morgan and Goldman Sachs), Filthy Rich China ideas (Focus Media Holding and Ctrip.com), Filthy Rich Transportation ideas ( American Airline and Southwest Airline), and Filthy Rich Specialty Retail ideas (Peet's coffee)
Please check out the archives for past posting on individual stocks. Also analysis is available at www.investorhives.com under FilthyRich hive. Thank you for visiting my blog.
AMGN
Description.
Large Cap biotech that develops proteins, monoclonal antibodies (MAbs) and small molecule drugs in areas including nephrology, cancer, and inflammation. Principle marketed therapeutics are Epogen and Aranesp (anemia), Neupogen and Neulasta (neutropenia), and Enbrel (rheumatoid arthritis and psoriasis). Key late stage pipeline compounds include: Denosumab (AMG-162), a fully human MAb to NF Kappa B (RANK) Ligand, in phase III for treatment and prevention of osteoporosis, non-metastatic prostate androgen ablation, and phase II for breast cancer related bone metastases and rheumatoid arthritis (RA); Vectibix (panitumumab, ABX-EGF), a fully human MAb to epidermal growth factor receptor (EGFr), for 3rd line colorectal cancer (CRC) and phase III with Avastin + chemo for 1st line CRC; AMG-706 kinase/angiogenesis inhibitor in phase II for gastrointestinal stromal tumor (GIST); AMG-531, a novel thrombopoietic in phase III for idiopathic thrombocytopenic purpura ITP; AMG 108, a MAb to IL-1r for inflammatory diseases; AMG 714, an anti-IL15 Ab for rheumatoid arthritis.
Milestone event.
Feb 20, 2007: FDA action for Roche's CERA for CKD anemia
1Q07: Vectibix PACCE (Pmab + Avastin + chemo in colon cancer) RR (January) and PFS data 1H07: Denosumab interim 2-year phase III results in PMO
1Q07: AMG 706 phase II metastatic thyroid cancer data
Mid-07: AMG-531 phase III pre- and post-splenectomy ITP data
2H07: Kepivance phase III oral mucositis data in solid tumors
My Take.
Premiere biotech company that is trading at a ridiculously low PE multiple. Massive stock buyback and more efficient manufacturing abroad will improve earning leverage despite the increased R&D expense. Highly attractive emerging pipeline in oncology area. Be patient and you will be rewarded. Strong buy with target price at $100.
The current stocks in that I cover are: Filthy Rich Tech ideas (comprised of Openwave, Avid Technology, Tivo, IBM, and Research in Motion), Filthy Rich Biotech ideas (comprised of Amgen, Celgene, Genzyme, Isis pharmaceuticals, Alnylam pharmaceutical, and Protein Design Lab), Filthy Rich Financial ideas (JP Morgan and Goldman Sachs), Filthy Rich China ideas (Focus Media Holding and Ctrip.com), Filthy Rich Transportation ideas ( American Airline and Southwest Airline), and Filthy Rich Specialty Retail ideas (Peet's coffee)
Please check out the archives for past posting on individual stocks. Also analysis is available at www.investorhives.com under FilthyRich hive. Thank you for visiting my blog.
Wednesday, January 10, 2007
Biotech milestones preview (2): PDLI
After the market close, Genentech reported extremely strong Jan 07 results. Good news for DNA means good news for PDLI which gets royalty revenue stream on most of all DNA blockbuster cancer drugs that includes Avastin and Herceptin.
PDLI
Description.
Marketed products: (1) Cardene I.V. is the only intravenous calcium channel blocker (calcium ion influx inhibitor) for the short-term treatment of hypertension when oral therapy is not feasible or desirable, (2) Retavase, a recombinant plasminogen activator, works by generating plasmin, an enzyme produced naturally by the body's blood plasma for management of acute myocardial infarction (AMI) or heart attack in adults for the improvement of ventricular function following AMI, the reduction of the incidence of congestive heart failure and the reduction of mortality associated with AMI and (3) IV Busulfex is an intravenous form of oral busulfan, a chemotherapeutic agent commonly used as part of a conditioning regimen in the transplant setting combination with cyclophosphamide, prior to allogeneic hematopoietic stem cell transplantation (also referred as blood or marrow transplantation or BMT) in patients with chronic myelogenous leukemia (CML).
Humanized mononoclonal antibodies (huMAbs) - receives royalties on sales of multiple products on the market, including DNA's Avastin, Herceptin, Lucentis, Raptiva, Xolair and MEDI's Synagis. Internal pipeline includes Nuvion (visilizumab, anti-CD3) - initiating first of two pivotal trials in 1Q06 for Nuvion - phase II/III study in IV steroid resistant moderate to severe ulcerative colitis (UC). Zenapax (daclizumab, anti-IL-2R) entering phase IIb dose-ranging study for moderate to severe persistent asthma. Zenapax is also in phase II for multiple sclerosis (add-on to Avonex) with BIIB. PDLI discontinued development of Zenapax for UC in May 2004. M200 (volociximab), an anti-alpha-5/beta-1 integrin chimeric Ab, is in phase II for solid tumors and phase I/II for AMD with BIIB. Huzaf (fontolizumab, anti-interferon-gamma) is in phase II for autoimmune diseases with BIIB. Ularitide, a recombinant form of the natriuretic peptide urodilantin is in phase II for acute decompensated congestive heart failure. Terlipressin is an intravenous peptide in a phase III trial for hepato-renal syndrome (HRS).
Milestone Events.
1Q07: Interim DSMB analysis from Nuvion phase II/III UC trial; begin phase III UC trial. 1Q07: M200 Initiate PII open label studies.
1H07: Initiate Ularitide phase III trial for ADHF in Europe.
1H07: M200 PIIb cancer go no/go Mid-2007: Initiate Ularitide phase III trial in 300 ADHF patients.
My Take.
Steady royalty relationship with large biotech companies such as DNA and BIIB puts the company into cash flow positive mode while developing its own in-house drug. One of the most promising franchise for mid-cap biotech names. Patiently waiting for the company to hit a homerun with either bowel inflammatory drug Nuvion or congestive heart failure drug Ulartide. Speculative buy with $30 TP.
The current stocks in that I cover are: Filthy Rich Tech ideas (comprised of Openwave, Avid Technology, Tivo, IBM, and Research in Motion), Filthy Rich Biotech ideas (comprised of Amgen, Celgene, Genzyme, Isis pharmaceuticals, Alnylam pharmaceutical, and Protein Design Lab), Filthy Rich Financial ideas (JP Morgan and Goldman Sachs), Filthy Rich China ideas (Focus Media Holding and Ctrip.com), Filthy Rich Transportation ideas ( American Airline and Southwest Airline), and Filthy Rich Specialty Retail ideas (Peet's coffee)
Please check out the archives for past posting on individual stocks. Also analysis is available at www.investorhives.com under FilthyRich hive. Thank you for visiting my blog.
PDLI
Description.
Marketed products: (1) Cardene I.V. is the only intravenous calcium channel blocker (calcium ion influx inhibitor) for the short-term treatment of hypertension when oral therapy is not feasible or desirable, (2) Retavase, a recombinant plasminogen activator, works by generating plasmin, an enzyme produced naturally by the body's blood plasma for management of acute myocardial infarction (AMI) or heart attack in adults for the improvement of ventricular function following AMI, the reduction of the incidence of congestive heart failure and the reduction of mortality associated with AMI and (3) IV Busulfex is an intravenous form of oral busulfan, a chemotherapeutic agent commonly used as part of a conditioning regimen in the transplant setting combination with cyclophosphamide, prior to allogeneic hematopoietic stem cell transplantation (also referred as blood or marrow transplantation or BMT) in patients with chronic myelogenous leukemia (CML).
Humanized mononoclonal antibodies (huMAbs) - receives royalties on sales of multiple products on the market, including DNA's Avastin, Herceptin, Lucentis, Raptiva, Xolair and MEDI's Synagis. Internal pipeline includes Nuvion (visilizumab, anti-CD3) - initiating first of two pivotal trials in 1Q06 for Nuvion - phase II/III study in IV steroid resistant moderate to severe ulcerative colitis (UC). Zenapax (daclizumab, anti-IL-2R) entering phase IIb dose-ranging study for moderate to severe persistent asthma. Zenapax is also in phase II for multiple sclerosis (add-on to Avonex) with BIIB. PDLI discontinued development of Zenapax for UC in May 2004. M200 (volociximab), an anti-alpha-5/beta-1 integrin chimeric Ab, is in phase II for solid tumors and phase I/II for AMD with BIIB. Huzaf (fontolizumab, anti-interferon-gamma) is in phase II for autoimmune diseases with BIIB. Ularitide, a recombinant form of the natriuretic peptide urodilantin is in phase II for acute decompensated congestive heart failure. Terlipressin is an intravenous peptide in a phase III trial for hepato-renal syndrome (HRS).
Milestone Events.
1Q07: Interim DSMB analysis from Nuvion phase II/III UC trial; begin phase III UC trial. 1Q07: M200 Initiate PII open label studies.
1H07: Initiate Ularitide phase III trial for ADHF in Europe.
1H07: M200 PIIb cancer go no/go Mid-2007: Initiate Ularitide phase III trial in 300 ADHF patients.
My Take.
Steady royalty relationship with large biotech companies such as DNA and BIIB puts the company into cash flow positive mode while developing its own in-house drug. One of the most promising franchise for mid-cap biotech names. Patiently waiting for the company to hit a homerun with either bowel inflammatory drug Nuvion or congestive heart failure drug Ulartide. Speculative buy with $30 TP.
The current stocks in that I cover are: Filthy Rich Tech ideas (comprised of Openwave, Avid Technology, Tivo, IBM, and Research in Motion), Filthy Rich Biotech ideas (comprised of Amgen, Celgene, Genzyme, Isis pharmaceuticals, Alnylam pharmaceutical, and Protein Design Lab), Filthy Rich Financial ideas (JP Morgan and Goldman Sachs), Filthy Rich China ideas (Focus Media Holding and Ctrip.com), Filthy Rich Transportation ideas ( American Airline and Southwest Airline), and Filthy Rich Specialty Retail ideas (Peet's coffee)
Please check out the archives for past posting on individual stocks. Also analysis is available at www.investorhives.com under FilthyRich hive. Thank you for visiting my blog.
Biotech milestones preview (1): GENZ
One of the important rituals that biotech investors must follow is diligently following the drug trial events and milestones. As I have noticed that many new members have joined FilthyRich group, I thought I would summarize the markets for all six companies and lists rough time frame for the important clinical trial/FDA filing events. Today I will write about GENZ and PDLI in two separate messages. Tomorrow, I will highlight AMGN and ISIS. Finally the day after tomorrow, I will go over CELG and ALNY. The information source is from Lehman reports published on Jan 5th, which complies the all the important events for more than 100 biotech companies. If you are interested in this report, email me via investorhives.com mail and I would be happy to share the report with you. So far, you have noticed that I talked more about CELG and AMGN in my articles. But I will promise that I will write more detailed articles about GENZ, PDLI, ISIS, and ALNY.
GENZ
Description.
Large cap biotech that is diverse with multiple business units encompassing six therapeutic categories: lysosomal storage diseases (LSDs), genetics/diagnostics, orthopedics/biomaterials, renal/endocrinology, transplant & immune disease, and oncology. Key products include: enzyme replacement therapies for LSDs, including Cerezyme for Gaucher's disease, Fabrazyme for Fabry disease, Aldurazyme for Hurler Scheie disease, and Myozyme for Pompe disease. Renagel is a phosphate binder marketed for end-stage renal disease (ESRD) and Hectorol (doxercalciferol) is a pro-hormone vitamin D2 analog for the treatment of secondary hyperparathyroidism in CKD and ESRD. Synvisc is an injectable hyaluronic acid based product marketed for relief of mild to moderate knee pain related to osteoarthritis. Thymoglobulin, an immunosuppressive polyclonal antibody, and Lymphoglobuline are marketed for acute renal transplant rejection. Acquisition of Ilex Oncology in 2004 bought Campath for chronic lymphocytic leukemia (CLL) and Clolar for pediatric acute lymphoblastic leukemia (ALL).
Milestone Events.
1Q07: DX-88 topline results from partner DYAX's EDEMA 3 phase III trial in HAE. 1Q07 Campath phase III PFS data in 1st-line B-CLL. 1H07: File for approval of sevelamer carbonate in CKD, powder form. 1H07: Myozyme data in late-onset Pompe's disease. 1H07: Tolevamer phase III data in clostridium difficile-associated diarrhea. 1H07: Synvisc launch in the US for use in the hip.
My Take.
King of special niche markets. Steady outlook with 15% topline growth potential over next 5 years. Offers both the reasonable growth rate and PE. Special gift at current price. Solid buy with $85 PT
The current stocks in that I cover are: Filthy Rich Tech ideas (comprised of Openwave, Avid Technology, Tivo, IBM, and Research in Motion), Filthy Rich Biotech ideas (comprised of Amgen, Celgene, Genzyme, Isis pharmaceuticals, Alnylam pharmaceutical, and Protein Design Lab), Filthy Rich Financial ideas (JP Morgan and Goldman Sachs), Filthy Rich China ideas (Focus Media Holding and Ctrip.com), Filthy Rich Transportation ideas ( American Airline and Southwest Airline), and Filthy Rich Specialty Retail ideas (Peet's coffee)
Please check out the archives for past posting on individual stocks. Also analysis is available at www.investorhives.com under FilthyRich hive. Thank you for visiting my blog.
GENZ
Description.
Large cap biotech that is diverse with multiple business units encompassing six therapeutic categories: lysosomal storage diseases (LSDs), genetics/diagnostics, orthopedics/biomaterials, renal/endocrinology, transplant & immune disease, and oncology. Key products include: enzyme replacement therapies for LSDs, including Cerezyme for Gaucher's disease, Fabrazyme for Fabry disease, Aldurazyme for Hurler Scheie disease, and Myozyme for Pompe disease. Renagel is a phosphate binder marketed for end-stage renal disease (ESRD) and Hectorol (doxercalciferol) is a pro-hormone vitamin D2 analog for the treatment of secondary hyperparathyroidism in CKD and ESRD. Synvisc is an injectable hyaluronic acid based product marketed for relief of mild to moderate knee pain related to osteoarthritis. Thymoglobulin, an immunosuppressive polyclonal antibody, and Lymphoglobuline are marketed for acute renal transplant rejection. Acquisition of Ilex Oncology in 2004 bought Campath for chronic lymphocytic leukemia (CLL) and Clolar for pediatric acute lymphoblastic leukemia (ALL).
Milestone Events.
1Q07: DX-88 topline results from partner DYAX's EDEMA 3 phase III trial in HAE. 1Q07 Campath phase III PFS data in 1st-line B-CLL. 1H07: File for approval of sevelamer carbonate in CKD, powder form. 1H07: Myozyme data in late-onset Pompe's disease. 1H07: Tolevamer phase III data in clostridium difficile-associated diarrhea. 1H07: Synvisc launch in the US for use in the hip.
My Take.
King of special niche markets. Steady outlook with 15% topline growth potential over next 5 years. Offers both the reasonable growth rate and PE. Special gift at current price. Solid buy with $85 PT
The current stocks in that I cover are: Filthy Rich Tech ideas (comprised of Openwave, Avid Technology, Tivo, IBM, and Research in Motion), Filthy Rich Biotech ideas (comprised of Amgen, Celgene, Genzyme, Isis pharmaceuticals, Alnylam pharmaceutical, and Protein Design Lab), Filthy Rich Financial ideas (JP Morgan and Goldman Sachs), Filthy Rich China ideas (Focus Media Holding and Ctrip.com), Filthy Rich Transportation ideas ( American Airline and Southwest Airline), and Filthy Rich Specialty Retail ideas (Peet's coffee)
Please check out the archives for past posting on individual stocks. Also analysis is available at www.investorhives.com under FilthyRich hive. Thank you for visiting my blog.
Tuesday, January 09, 2007
RIMM: Apple I-phone introduction pressures to the downside.
Apple reveals a long-waited iPhone during MacWorld Show in San Francisco today. iPhone's launch was rumored to be delayed; however, Steve Job made sure today that it was a false rumor. iPhone looks fantastic with 3.5 inch crystal clear screen with extremely thin side profile. iPhone is much more than a phone, endowed with Apple's IPod function, internet browser capability, email function as well as the basic PC capability. It will be truly wanted device once the price will fall within a year or two. Initially iPhone will be priced for $499 for 4 GB version and $599 for 8 Gb version. Apple looks pretty well positioned to benefit from its product entry into phone and digital media market. I am bullish on Apple's long term prospect.
While Apple was busy racking up impressive gain today (up by more than 8% or $7 and a change), RIMM shares were busy falling. RIMM shares shed nearly 8% or $11 and a change. Leading to precipitous fall, RIMM shares continued to defy the gravity and have risen to all time high level. However, as I have maintained in my previous messages, I am skeptical of RIMM's long term business prospect.
(see http://www.investorhives.com...)
Investors are expecting the company's new product Pearl will help the company to capture a lion share of consumer smart phone market while growing its enterprise business with little competitive threat. Today's apple jump into the consumer smart phone market shows that RIMM's market place is becoming increasingly crowded. RIMM is facing Apple iPhone (selling in June from Cingular) in the high end market. From lower end segment, the competitions are stiff from HP, LG, Palm, Samsung, Motorola, and Nokia. You have noticed Motorola has announced the earning shortfall last week, which have pounded its share price to the downside. Motorola is facing stiff pricing pressure from Nokia who is leveraging on manufacturing prowess to push the unit price lower to capture additional market share. Nokia's such business plan does not only impact Motorola but entire smart phone industry, including RIMM. I also don't see emotional appeal with RIMM's Pearl as I would with Apple iPhone. Consequently, consumers may not remain as loyal to RIMM as some investors are anticipating. I believe that RIMM's PE multiple is simply too high which is competing in consumer segment with numerous number of fierce competitions. Consumer product business rarely yield high margin and as RIMM emphasizes more and more consumer related business, its overall net profit margin is bound to fall drastically. As such, PE of 25 is more appropriate value rather than current one that exceeds 50. Despite the EPS growth that may exceed $4.5 for next fiscal year, shrinking multiple may cap the share price value around $110 and I believe that RIMM is currently a good short candidate. I continue to recommend shorting the stock above $135 level with the target price at $95 a share.
The current stocks in that I cover are: Filthy Rich Tech ideas (comprised of Openwave, Novellus, Sirf Technology, Avid Technology, Trident Systems, Tivo, IBM, and Research in Motion), Filthy Rich Biotech ideas (comprised of Amgen, Celgene, Genzyme, Isis pharmaceuticals, Alnylam pharmaceutical, and Protein Design Lab), Filthy Rich Financial ideas (JP Morgan and Goldman Sachs), Filthy Rich China ideas (Focus Media Holding and Ctrip.com), Filthy Rich Transportation ideas ( American Airline and Southwest Airline), and Filthy Rich Specialty Retail ideas (Peet's coffee)
Please check out the archives for past posting on individual stocks. Also analysis is available at www.investorhives.com under FilthyRich hive. Thank you for visiting my blog.
While Apple was busy racking up impressive gain today (up by more than 8% or $7 and a change), RIMM shares were busy falling. RIMM shares shed nearly 8% or $11 and a change. Leading to precipitous fall, RIMM shares continued to defy the gravity and have risen to all time high level. However, as I have maintained in my previous messages, I am skeptical of RIMM's long term business prospect.
(see http://www.investorhives.com...)
Investors are expecting the company's new product Pearl will help the company to capture a lion share of consumer smart phone market while growing its enterprise business with little competitive threat. Today's apple jump into the consumer smart phone market shows that RIMM's market place is becoming increasingly crowded. RIMM is facing Apple iPhone (selling in June from Cingular) in the high end market. From lower end segment, the competitions are stiff from HP, LG, Palm, Samsung, Motorola, and Nokia. You have noticed Motorola has announced the earning shortfall last week, which have pounded its share price to the downside. Motorola is facing stiff pricing pressure from Nokia who is leveraging on manufacturing prowess to push the unit price lower to capture additional market share. Nokia's such business plan does not only impact Motorola but entire smart phone industry, including RIMM. I also don't see emotional appeal with RIMM's Pearl as I would with Apple iPhone. Consequently, consumers may not remain as loyal to RIMM as some investors are anticipating. I believe that RIMM's PE multiple is simply too high which is competing in consumer segment with numerous number of fierce competitions. Consumer product business rarely yield high margin and as RIMM emphasizes more and more consumer related business, its overall net profit margin is bound to fall drastically. As such, PE of 25 is more appropriate value rather than current one that exceeds 50. Despite the EPS growth that may exceed $4.5 for next fiscal year, shrinking multiple may cap the share price value around $110 and I believe that RIMM is currently a good short candidate. I continue to recommend shorting the stock above $135 level with the target price at $95 a share.
The current stocks in that I cover are: Filthy Rich Tech ideas (comprised of Openwave, Novellus, Sirf Technology, Avid Technology, Trident Systems, Tivo, IBM, and Research in Motion), Filthy Rich Biotech ideas (comprised of Amgen, Celgene, Genzyme, Isis pharmaceuticals, Alnylam pharmaceutical, and Protein Design Lab), Filthy Rich Financial ideas (JP Morgan and Goldman Sachs), Filthy Rich China ideas (Focus Media Holding and Ctrip.com), Filthy Rich Transportation ideas ( American Airline and Southwest Airline), and Filthy Rich Specialty Retail ideas (Peet's coffee)
Please check out the archives for past posting on individual stocks. Also analysis is available at www.investorhives.com under FilthyRich hive. Thank you for visiting my blog.
CELG: Buy the dip: upping the PT to $73
JP Morgan is holding HealthCare conference in San Francisco, CA this week. Ahead of the conference, CELG held investor meeting and the provided the guidance for year end result 06 and fiscal year 07. The press release hit the wire after the market today.
(see http://biz.yahoo.com...).
In its guidance, CELG is guiding for sales of $315 ~ $320 mil for Revlimid, largely in line with the consensus number out there. Thalomid is guided to bring the revenue in the range of $425 ~ $430 mil, again in line with the street expectation. Total revenue for 06 will be around $890 with EPS that triples the 05 number. This puts the EPS for 06 to be around 57 cents, about 4 cents above the mean estimate number shown by yahoo figure. This guidance implies 3 to 4 cents EPS upside for the upcoming quarterly results that is going to be released in early Feb.
For 07, CELG is predicting the topline number of 1.3 billion with the EPS of roughly $1. This number is again largely in line with the consensus number (consensus 1.39 billion with EPS of $1.09). As CELG shares trade with premiere multiple to its peers due to much higher earning growth rate, this number is seen as disappointing; momentum investors always expect the company to continue to blow away the estimate. In fact, there has been some negative press release after the market by Street.com, calling the 07 guidance as earning short fall. However, 90 mil shy of overall 1300 mil is less than 7% of the total revenue. As Revlimid is ramping up fast and is penetrating much wider market than originally estimated, I believe that the company is providing extremely conservative and crude number. So in no way the guided numbers fell short of the original estimate. In my opinion, 07 numbers have a lot of conservatism built into it given the rapid Revlimid uptake and increased marketing expense upon European approval of Revlimid. Nevertheless, I expect the momentum traders to seize the opportunity to take the share price down tomorrow. Should this happens, I want you to step in and buy the shares. I see fairly strong price support in mid 50's and this could provide you with good entry point. Given possible volatility you may see in January for the overall market, don't commit all of your money at once. Buy the stocks in steps. Use tomorrow weakness to commit 30% of your money and should there be a further dip, open up additional 30%. Once uptrend is confirmed again, you can commit the remaining 40% of the intended fund.
Despite what may seem as rather anemic guidance from CELG, I am upping my long term price target to $73 from $60. I promised to you guys that I will assess my long term price target for CELG as it is nearing my revised TP of $60. Last ASH (American Society of Hematology) in Dec was an extremely powerful event for CELG franchise. What became evident out of 06 ASH was the much wider than expected market potential for Revlimid. Once thought as a specialty drug in niche market in the blood cancer, Revlimid was seen to garner a fair share in specific form of MDS and (late line) MM market. With both US and European approval, Revlimid is set to bring in roughly 2 billion revenue for the company, which it is likely to surpass sometime in 08. However, ASH is revealing extremely compelling data for Revlimid to be effective in much wider areas of MDS (non-5q) and MM (1st line). Furthermore, it has a clear potential in CLL and NHL market with 500 mil and 4 billion dollar revenue potential. So the Revlimid may have far greater than 2 billion potential currently being perceived. In fact, some analysts are taking off the label usage of Revlimid in CLL and are bumping up earning estimate and consequently, the share price has been very, very strong in recent times.
As seen in the figure (http://www.investorhives.com/big_pic.php?fname=uploaded_files2%2Fjongyoo143.png&caption=CELG%20product%20pipeline&msgid=294), outside of Revlimid, CELG is armed with one of the most potent pipeline among biotech companies. It has more advanced IMiDs that targets inflammatory and immunological diseases. The company is also targeting many solid tumor and cancer areas for its advanced line of IMiDs drugs. The company also has early products in development which includes Bezopyranes, Kinase Inhibitors, as well as Ligase Inhibitors. Furthermore, I believe CELG's stem cell product is poised to get more attention with investor community as Democrats become more vociferous in pushing congressional efforts with healthcare programs with Stem Cell Technology.
Robust uptake in Revlimid and strong pipeline with near term potential puts the company for fast growth for considerable period of time. I expect that by late 09 to early 2010, the CELG may be able to show annual revenue run rate of roughly 3.5 billion with net profit margin exceeding 30% due to extremely high gross margin of Revlimid. EPS is likely to surpass $3 a share based on 352 mil share counts. Let us assume contracted PE multiple of 30 to 35 from current 50 to 60. Well you do the calculation, but the whole point of this exercise is the stock still has plenty of upside. I know it is hard to believe given the great gain in the share price. But I have to call it as I see it.
The current stocks in that I cover are: Filthy Rich Tech ideas (comprised of Openwave, Novellus, Sirf Technology, Avid Technology, Trident Systems, Tivo, IBM, and Research in Motion), Filthy Rich Biotech ideas (comprised of Amgen, Celgene, Genzyme, Isis pharmaceuticals, Alnylam pharmaceutical, and Protein Design Lab), Filthy Rich Financial ideas (JP Morgan and Goldman Sachs), Filthy Rich China ideas (Focus Media Holding and Ctrip.com), Filthy Rich Transportation ideas ( American Airline and Southwest Airline), and Filthy Rich Specialty Retail ideas (Peet's coffee)
Please check out the archives for past posting on individual stocks. Also analysis is available at www.investorhives.com under FilthyRich hive. Thank you for visiting my blog.
(see http://biz.yahoo.com...).
In its guidance, CELG is guiding for sales of $315 ~ $320 mil for Revlimid, largely in line with the consensus number out there. Thalomid is guided to bring the revenue in the range of $425 ~ $430 mil, again in line with the street expectation. Total revenue for 06 will be around $890 with EPS that triples the 05 number. This puts the EPS for 06 to be around 57 cents, about 4 cents above the mean estimate number shown by yahoo figure. This guidance implies 3 to 4 cents EPS upside for the upcoming quarterly results that is going to be released in early Feb.
For 07, CELG is predicting the topline number of 1.3 billion with the EPS of roughly $1. This number is again largely in line with the consensus number (consensus 1.39 billion with EPS of $1.09). As CELG shares trade with premiere multiple to its peers due to much higher earning growth rate, this number is seen as disappointing; momentum investors always expect the company to continue to blow away the estimate. In fact, there has been some negative press release after the market by Street.com, calling the 07 guidance as earning short fall. However, 90 mil shy of overall 1300 mil is less than 7% of the total revenue. As Revlimid is ramping up fast and is penetrating much wider market than originally estimated, I believe that the company is providing extremely conservative and crude number. So in no way the guided numbers fell short of the original estimate. In my opinion, 07 numbers have a lot of conservatism built into it given the rapid Revlimid uptake and increased marketing expense upon European approval of Revlimid. Nevertheless, I expect the momentum traders to seize the opportunity to take the share price down tomorrow. Should this happens, I want you to step in and buy the shares. I see fairly strong price support in mid 50's and this could provide you with good entry point. Given possible volatility you may see in January for the overall market, don't commit all of your money at once. Buy the stocks in steps. Use tomorrow weakness to commit 30% of your money and should there be a further dip, open up additional 30%. Once uptrend is confirmed again, you can commit the remaining 40% of the intended fund.
Despite what may seem as rather anemic guidance from CELG, I am upping my long term price target to $73 from $60. I promised to you guys that I will assess my long term price target for CELG as it is nearing my revised TP of $60. Last ASH (American Society of Hematology) in Dec was an extremely powerful event for CELG franchise. What became evident out of 06 ASH was the much wider than expected market potential for Revlimid. Once thought as a specialty drug in niche market in the blood cancer, Revlimid was seen to garner a fair share in specific form of MDS and (late line) MM market. With both US and European approval, Revlimid is set to bring in roughly 2 billion revenue for the company, which it is likely to surpass sometime in 08. However, ASH is revealing extremely compelling data for Revlimid to be effective in much wider areas of MDS (non-5q) and MM (1st line). Furthermore, it has a clear potential in CLL and NHL market with 500 mil and 4 billion dollar revenue potential. So the Revlimid may have far greater than 2 billion potential currently being perceived. In fact, some analysts are taking off the label usage of Revlimid in CLL and are bumping up earning estimate and consequently, the share price has been very, very strong in recent times.
As seen in the figure (http://www.investorhives.com/big_pic.php?fname=uploaded_files2%2Fjongyoo143.png&caption=CELG%20product%20pipeline&msgid=294), outside of Revlimid, CELG is armed with one of the most potent pipeline among biotech companies. It has more advanced IMiDs that targets inflammatory and immunological diseases. The company is also targeting many solid tumor and cancer areas for its advanced line of IMiDs drugs. The company also has early products in development which includes Bezopyranes, Kinase Inhibitors, as well as Ligase Inhibitors. Furthermore, I believe CELG's stem cell product is poised to get more attention with investor community as Democrats become more vociferous in pushing congressional efforts with healthcare programs with Stem Cell Technology.
Robust uptake in Revlimid and strong pipeline with near term potential puts the company for fast growth for considerable period of time. I expect that by late 09 to early 2010, the CELG may be able to show annual revenue run rate of roughly 3.5 billion with net profit margin exceeding 30% due to extremely high gross margin of Revlimid. EPS is likely to surpass $3 a share based on 352 mil share counts. Let us assume contracted PE multiple of 30 to 35 from current 50 to 60. Well you do the calculation, but the whole point of this exercise is the stock still has plenty of upside. I know it is hard to believe given the great gain in the share price. But I have to call it as I see it.
The current stocks in that I cover are: Filthy Rich Tech ideas (comprised of Openwave, Novellus, Sirf Technology, Avid Technology, Trident Systems, Tivo, IBM, and Research in Motion), Filthy Rich Biotech ideas (comprised of Amgen, Celgene, Genzyme, Isis pharmaceuticals, Alnylam pharmaceutical, and Protein Design Lab), Filthy Rich Financial ideas (JP Morgan and Goldman Sachs), Filthy Rich China ideas (Focus Media Holding and Ctrip.com), Filthy Rich Transportation ideas ( American Airline and Southwest Airline), and Filthy Rich Specialty Retail ideas (Peet's coffee)
Please check out the archives for past posting on individual stocks. Also analysis is available at www.investorhives.com under FilthyRich hive. Thank you for visiting my blog.
Friday, January 05, 2007
Closing out position with NVLS, TRID, and SIRF.
I hope that everyone had a very happy New Year. The market is starting out the New Year in an exciting way. Yesterday, DOW moved with a range that exceeded 175 pts and today NASDAQ had a very strong rally. Everyone is starting to get excited about the market's sustained gain. The market had not had a correction within 7 months (with magnitude greater than 2%) and this has not occurred in the market's history.
Although I am bullish on 2007 market outlook, especially with emerging market (China), transportation (airline), biotechs (both large and small caps), financials (integrated banks and brokers) and last but not the least techs, I think the market is due for a correction. The market may remain fairly strong as we head into the heart of the earning season. In fact, I expect that the earning for January will be extremely strong. But I remain doubtful the guidance could be the same. As a result, after this earning season, we may run into a little corrective period. Because I am bullish on 2007 as a whole, correction would be a great buying opportunity and I really want you to have some cash to deploy when this happens. As such, I think profit taking on some of your winners could be shrewd.
The market has been strong in anticipation that the economy is achieving a soft landing. The market thinks the economy is slowing down but the earning will not be hurt. The market is anticipating at least 2 Fed rate cuts this year. Some are actually forecasting as many as 4 rate cuts. My take is in order for the market to see Fed rate cuts that is as aggressive as forecasted and expected, the economy has meaningfully slow down. Meaningfully slowing down economy means reduced earning for corporate America. As such, higher earning and slower economy that the market is expecting could be difficult to achieve simultaneously. My bet is that the economy is going to show signs of further slowdown ahead and will temporarily drag the earning performance in the late spring and early summer. I believe this is when Fed may start easing the rates. So until then, we may have some hiccups in the market here and there and as the market has been rallying for so long, any perturbations away from the soft landing scenario could trigger nasty correction (5 to 10% in magnitude). Lately oil price and metal commodities are showing signs of cracking down again. Oil broke below $56 level today, largely due to warm weather that we are seeing this winter. Copper are also at 8 months low. Although weather may play in a role with lower energy price, the truth is demand for oil and commodity is lower with slowdown in the manufacturing (auto and construction) sector.
I am closing out three names in tech area where I anticipate the most corrective action may happen given the relative strength of the sector. I am locking in gains with NVLS and TRID. I am taking a little loss with SIRF. NVLS is a semi equipment company that I initiated 7 months ago due to valuation. Since then it has racked up impressive 47% gain. The company lately announced that its president Sass Somek whom I think is the tech visionary is retiring from the company. I am not a fan of current CEO Rick Hill as he has screwed up the company big time with its overexpansion of the business (ego trip) and ruin the net profit margin of the company. The share price of NVLS has lately run up due to speculation that the company may be taken private at a higher premium. Because I am anticipating somewhat choppy environment in the semiconductor land especially in the consumer related devices, I don¡¯t see much fundamental catalysts with semi equipment names. I may revisit semi equipment names in the late spring, possibly with LRCX. But for now, I am taking the profit with NVLS.
TRID is a pure semi play with HDTV. The sales of the HDTV (LCD, plasma, and projection) have been brisk during this holiday season. However, I am getting concerned with the rapid pace of the unit price decline. The price of the LCD and projection TV has dropped so precipitously that I am beginning to worry about the margin pressure for TRID. In the summer of this year, we had much higher profit with TRID near 80% gain but the shares have never recovered strongly from the summer correction and today I am closing out position with 17% gain. With TRID, we held the stock for 13 months.
SIRF is a pure semi play with GPS device. SIRF started very strongly after we have initiated the name 13 months ago. We had gain as large as 50% at one point during the summer. But after the summer correction, like TRID, the stock remained anemic. The reason is the increasing competition. There are small players emerging in GPS chip market that is pressuring its margin. In Dec, the rumor of market share loss with Tom-Tom also dragged the share price lower. In addition, with the auto companies in doldrums, the GPS market associated with the auto manufacturers could be weak. Consumer GPS market has been very vibrant. But I also noticed that the pricing is getting brutal and as the GPS devices become commoditized, the margin is likely to suffer. Hence I am taking a slight loss of -5.2% and am removing the name from the core list.
In the following message (tomorrow), I will summarize all the current performance for the entire filthyrich list of stocks. Only members will be able to view this list. In addition, in order to update you more regularly on all names, I will try to do biweekly comments on all the names covered in the list. The comments will not be as extensive as the stock article I write on individual names. But this way all the stocks will get the coverage to a certain extent. This bi-weekly communication will only be available to the members.
The current stocks in that I cover are: Filthy Rich Tech ideas (comprised of Openwave, Novellus, Sirf Technology, Avid Technology, Trident Systems, Tivo, IBM, and Research in Motion), Filthy Rich Biotech ideas (comprised of Amgen, Celgene, Genzyme, Isis pharmaceuticals, Alnylam pharmaceutical, and Protein Design Lab), Filthy Rich Financial ideas (JP Morgan and Goldman Sachs), Filthy Rich China ideas (Focus Media Holding and Ctrip.com), Filthy Rich Transportation ideas ( American Airline and Southwest Airline), and Filthy Rich Specialty Retail ideas (Peet's coffee)
Please check out the archives for past posting on individual stocks. Also analysis is available at www.investorhives.com under FilthyRich hive. Thank you for visiting my blog.
Although I am bullish on 2007 market outlook, especially with emerging market (China), transportation (airline), biotechs (both large and small caps), financials (integrated banks and brokers) and last but not the least techs, I think the market is due for a correction. The market may remain fairly strong as we head into the heart of the earning season. In fact, I expect that the earning for January will be extremely strong. But I remain doubtful the guidance could be the same. As a result, after this earning season, we may run into a little corrective period. Because I am bullish on 2007 as a whole, correction would be a great buying opportunity and I really want you to have some cash to deploy when this happens. As such, I think profit taking on some of your winners could be shrewd.
The market has been strong in anticipation that the economy is achieving a soft landing. The market thinks the economy is slowing down but the earning will not be hurt. The market is anticipating at least 2 Fed rate cuts this year. Some are actually forecasting as many as 4 rate cuts. My take is in order for the market to see Fed rate cuts that is as aggressive as forecasted and expected, the economy has meaningfully slow down. Meaningfully slowing down economy means reduced earning for corporate America. As such, higher earning and slower economy that the market is expecting could be difficult to achieve simultaneously. My bet is that the economy is going to show signs of further slowdown ahead and will temporarily drag the earning performance in the late spring and early summer. I believe this is when Fed may start easing the rates. So until then, we may have some hiccups in the market here and there and as the market has been rallying for so long, any perturbations away from the soft landing scenario could trigger nasty correction (5 to 10% in magnitude). Lately oil price and metal commodities are showing signs of cracking down again. Oil broke below $56 level today, largely due to warm weather that we are seeing this winter. Copper are also at 8 months low. Although weather may play in a role with lower energy price, the truth is demand for oil and commodity is lower with slowdown in the manufacturing (auto and construction) sector.
I am closing out three names in tech area where I anticipate the most corrective action may happen given the relative strength of the sector. I am locking in gains with NVLS and TRID. I am taking a little loss with SIRF. NVLS is a semi equipment company that I initiated 7 months ago due to valuation. Since then it has racked up impressive 47% gain. The company lately announced that its president Sass Somek whom I think is the tech visionary is retiring from the company. I am not a fan of current CEO Rick Hill as he has screwed up the company big time with its overexpansion of the business (ego trip) and ruin the net profit margin of the company. The share price of NVLS has lately run up due to speculation that the company may be taken private at a higher premium. Because I am anticipating somewhat choppy environment in the semiconductor land especially in the consumer related devices, I don¡¯t see much fundamental catalysts with semi equipment names. I may revisit semi equipment names in the late spring, possibly with LRCX. But for now, I am taking the profit with NVLS.
TRID is a pure semi play with HDTV. The sales of the HDTV (LCD, plasma, and projection) have been brisk during this holiday season. However, I am getting concerned with the rapid pace of the unit price decline. The price of the LCD and projection TV has dropped so precipitously that I am beginning to worry about the margin pressure for TRID. In the summer of this year, we had much higher profit with TRID near 80% gain but the shares have never recovered strongly from the summer correction and today I am closing out position with 17% gain. With TRID, we held the stock for 13 months.
SIRF is a pure semi play with GPS device. SIRF started very strongly after we have initiated the name 13 months ago. We had gain as large as 50% at one point during the summer. But after the summer correction, like TRID, the stock remained anemic. The reason is the increasing competition. There are small players emerging in GPS chip market that is pressuring its margin. In Dec, the rumor of market share loss with Tom-Tom also dragged the share price lower. In addition, with the auto companies in doldrums, the GPS market associated with the auto manufacturers could be weak. Consumer GPS market has been very vibrant. But I also noticed that the pricing is getting brutal and as the GPS devices become commoditized, the margin is likely to suffer. Hence I am taking a slight loss of -5.2% and am removing the name from the core list.
In the following message (tomorrow), I will summarize all the current performance for the entire filthyrich list of stocks. Only members will be able to view this list. In addition, in order to update you more regularly on all names, I will try to do biweekly comments on all the names covered in the list. The comments will not be as extensive as the stock article I write on individual names. But this way all the stocks will get the coverage to a certain extent. This bi-weekly communication will only be available to the members.
The current stocks in that I cover are: Filthy Rich Tech ideas (comprised of Openwave, Novellus, Sirf Technology, Avid Technology, Trident Systems, Tivo, IBM, and Research in Motion), Filthy Rich Biotech ideas (comprised of Amgen, Celgene, Genzyme, Isis pharmaceuticals, Alnylam pharmaceutical, and Protein Design Lab), Filthy Rich Financial ideas (JP Morgan and Goldman Sachs), Filthy Rich China ideas (Focus Media Holding and Ctrip.com), Filthy Rich Transportation ideas ( American Airline and Southwest Airline), and Filthy Rich Specialty Retail ideas (Peet's coffee)
Please check out the archives for past posting on individual stocks. Also analysis is available at www.investorhives.com under FilthyRich hive. Thank you for visiting my blog.
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