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XOMA Corp XOMA Stock News

XOMA Corp (NASDAQ: XOMA)

XOMA Corp has had an incredible run in the market over the past couple of weeks, and for good reason. The company recently announced the initiation of a Phase 2 study that’s likely to lead to overwhelmingly positive results. This has both investors and analysts excited with regard to what they can expect to see from the stock moving forward. Recently, XOMA also hired a new COO. Today, we’ll talk about the news, what we’ve seen in the market, and what we can expect to see from XOMA moving forward.

XOMA Phase 2 Study Initiated!

XOMA is working on an experimental medication that’s known as XOMA 358. The experimental treatment is designed to prevent hypoglycemia in patients with congenital hyperinsulinism or HI. In Phase 1, the treatment performed incredibly well. As a result, the company is now working on the Phase 2 study of the treatment, a study which was recently initiated. The goal of the study is to evaluate the safety and efficacy of a single dose of XOMA 358. In a statement, Paul Rubin, M.D. CEO of XOMA had the following to say:

New treatments that safely and effectively attenuate insulin-induced hypoglycemia are needed for patients with congenital hyperinsulinism, as well as other diseases that cause hypoglycemia due to high insulin levels. There are no approved medications, and those currently used have inconsistent efficacy and issues with tolerability. Currently disease management options are limited to continuous ingestion or infusion of glucose or surgical removal of part or all of the pancreas…. We are developing XOMA 358 as a first-in-class therapeutic for patients with this potentially fatal disease, and we are pleased to be conducting this study at a world-class medical center recognized for its leadership in treating HI patients.”

When the news above first broke, we saw an incredible rise in the value of XOMA as investors and analysts alike proved to be excited about the news.

XOMA Appoints New COO

Also making recent headlines, XOMA’s Board of Directors appointed the company’s Vice President of Business Development, Jim Neal to serve as the Senior Vice President and Chief Operating Officer. The announcement of the news was made on October 29th and Neal effectively took the position as of November 1st. Jim Neal’s new salary is now $400,000 in addition to incentive cash compensation with a maximum of 40% of Neal’s salary.

How The Market Is Reacting To The News

Since the announcement of the Phase 2 initiation, XOMA has been doing incredibly well in the market. We have seen a massive increase in the value of the stock. Just since Friday, October 30th, the stock has climbed from $1.22 per share to $1.78 per share and seems to be continuing on the upward trend.

What We Can Expect To See From XOMA Moving Forward

All in all, XOMA is making great moves at the moment. Investors are heavily focused on the Phase 2 study of XOMA 358. In Phase 1, the treatment resulted in a dose-dependent increase in post-meal glucose, decrease in insulin signaling, and prevention of hypoglycemia after intravenous insulin administration. Based on the solid Phase 1 results, there’s no reason to expect negativity from Phase 2. With that said, I’m expecting to see a continuation of gains on the stock.

What Do You Think?

Where do you think XOMA is headed and why? Let us know your opinion in the comments below!

Celgene CELG Stock News

Celgene Corporation (NASDAQ: CELG)

As expected, Celgene reported earnings for the third quarter. Also as many expected, the company beat expectations with regard to EPS. However, the stock is declining in pre-market trading; this has, unfortunately, become the expectation for CELG. Today, we’ll talk about earnings, what we’re seeing in the market as a result, and what we can expect to see from the stock moving forward.

CELG Beats Earnings Per Share Expectations

While Celgene beat expectations with regard to earnings per share, the company missed expectations with regard to revenue. Here’s what we saw from the report:

  • Earnings Per Share – In the quarter, analysts expected CELG to produce earnings per share at $1.21. However, the company beat those expectations, reporting earnings per share at $1.23.
  • Revenue – Unfortunately, the company missed expectations with regard to revenue. In the quarter, analysts expected Celgene to generate revenue in the amount of $2.4 billion. In the quarter, the company reported revenue at $2.33 billion.

All in all, in my opinion, the earnings report was overwhelmingly positive. Sure, I would have loved to have seen CELG produce revenue that was up to par with expectations, but with solid earnings, it’s hard to complain.

Celgene Declines After Earnings

While earnings were positive overall, it seems at first glance that investors were a bit upset with revenue. After all, the stock is declining quite a bit in the market in pre-market trading. Currently (9:05), CELG is trading at $122.85 per share after a loss of $4.32 or 3.40%. However, looking into the history of Celgene’s reactions after earnings, this type of movement is more or less expected. Generally, we see declines after earnings followed by a strong recovery.

What We Can Expect To See Moving Forward

As mentioned above, the report from CELG was positive overall. Although revenue was a slight miss, earnings came in above expectations, leveling the playing field. Those who have traded CELG around earnings in the past know that around this time declines are expected, however gains are coming soon. With that said, I’m expecting for today to be a relatively bad day for CELG, but that doesn’t mean that things will stay this way; in fact, I’m expecting a strong recovery. So, if you’re looking to turn a profit from CELG and already own the stock, don’t be too concerned about the declines today; we’ll see positive movement soon enough. If you don’t already own Celgene, you may want to consider buying at the bottom today and taking advantage of tomorrow’s uptrends!

What Do You Think?

Where do you think CELG is headed and why? Let us know your opinion in the comments below!

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Hewlett Packard HPQ Stock News

In October 2014, Hewlett-Packard Company (NYSE:HPQ) announced it would split into two separate, publicly traded companies. HP Inc. will focus on PCs and printing, and HP Enterprise will focus on newer technologies, such as cloud and data storage. With a decline in PCs and consumer printing, HP had to restructure in order to recoup its consistently missed earnings estimates, underperforming for the past 10 quarters. Other tech giants such as Dell have made similar moves in the last year, buying EMC and focusing more on the cloud and data storage sectors to stay relevant and competitive in the ever-changing market.

After HP announced low Q3 earnings, down 8% from the previous year, some analysts were apprehensive of the change, while others saw an opportunity for growth. Although the company last posted non-GAAP earnings per share of 87 cents, beating estimates of 85 cents, it missed its $25.5 billion estimated revenue, reporting only $25.3 billion.

In May, Keith Bachman of BMO capital reiterated a Market Perform rating on HPQ and lowered his price target from $42 to $38, stating that cost cutting is not the right direction for the company. He commented that HP should focus more on investing in newer sectors to stay relevant. Similarly, analyst Brian White, with Cantor Fitzgerald at the time, issued a Hold rating on HPQ in August and reduced his price target from $33 to $29, pointing to “challenged trends across the PC and printing markets.”

Despite critics of the decision to split, some believe the move is just what HP needs to stay competitive. HP CFO Catherine Lesjak quelled investor concerns, citing that HP’s market share in the PC sector rose to 18.9% in the third quarter. Likewise, Jim Suva of Citigroup reiterated a Buy rating in May with a $41 price target. The analyst cited that the $450 million dollar estimated restructuring cost was lower than the predicted $500 million to $1 billion, as this “dis-synergy cost was the last major overhang that needed to be resolved before investors became comfortable owning HPQ shares into the break-up in November.”

Now that the company has split, shares decreased 34% year to date and are currently trading at approximately $14, hovering near its 52-week low of $12.13. Kulbinder Garcha of Credit Suisse initiated coverage on HPQ with an Outperform rating and a price target of $19. He believes that although the printing and consumer industry is declining, the key to HP’s success in this split is its investment in new technologies. Furthermore, the analyst sees the split as an opportunity for the company to generate revenue from other aspects of its consumer sector, such as ink. According to Garcha, HP’s strategy to focus more on the commercial sector “could offset declining consumer printers with higher value commercial printers” by investing more in its subsidiaries such as IPG, which makes laser printers.

HPQ consensus

Kulbinder Garcha has an overall success rate recommending stocks of 55% with an average return of +7.8% per rating. According to TipRanks, 13 of the 22 analysts who have weighed in on HPQ in the last 3 months are bullish on the technology company, 1 analyst is bearish, and 8 are staying on the sidelines. The average 12-month price target between these 22 analysts is $32.87, marking a 137% potential upside from current levels.

Groupon Inc. (GRPN) is expected to report earnings on Tuesday, November 3rd. The whisper number is $0.01, one cent behind the analysts’ estimate and showing little confidence from the WhisperNumber community. Whispers range from a low of -$0.02 to a high of $0.02. Groupon has a 33% positive surprise history (having topped the whisper in 4 of the 12 earnings reports for which we have data).

Earnings history:

– Beat whisper: 4 qtrs

– Met whisper: 3 qtrs

– Missed whisper: 5 qtrs

Our primary focus is on post earnings price movement. Knowing how likely a stock’s price will move following an earnings report can help you determine the best action to take (long or short). In other words, we analyze what happens when the company beats or misses the whisper number expectation.

The table below indicates the average post earnings price movement within a one and thirty trading day timeframe:

GRPN1115A

The strongest price movement of -10.5% comes within ten trading days when the company reports earnings that beat the whisper number, and +18.5% within thirty trading days when the company reports earnings that miss the whisper number. The overall average post earnings price move is ‘opposite’ (beat the whisper number and see weakness, miss and see strength) when the company reports earnings.

The table below indicates the most recent earnings reports and short-term price reaction:

GRPN1115B

The company has reported earnings ahead of the whisper number in one of the past four quarters with a whisper number. In the comparable quarter last year the company did not have a whisper number. Last quarter the company reported earnings one cent short of the whisper number. Following that report the stock realized a 26.7% loss in thirty trading day. Overall historical data indicates the company to be (on average within thirty trading days) an ‘opposite’ price reactor when the company reports earnings.

WhisperNumber provides detailed earnings analysis and earnings trade alerts. Learn more here.

[Image courtesy of pcmag.com]

Tesla TSLA Stock News

Tesla (TSLA) is expected to report earnings on Tuesday, November 3rd. The whisper number is -$0.55, five cents behind the analysts’ estimate and showing no confidence from the WhisperNumber community. Whispers range from a low of -$0.65 to a high of -$0.48. Tesla has a 54% positive surprise history (having topped the whisper in 7 of the 13 earnings reports for which we have data).

Earnings history:

– Beat whisper: 7 qtrs

– Met whisper: 0 qtrs

– Missed whisper: 6 qtrs

Our primary focus is on post earnings price movement. Knowing how likely a stock’s price will move following an earnings report can help you determine the best action to take (long or short). In other words, we analyze what happens when the company beats or misses the whisper number expectation.

The table below indicates the average post earnings price movement within a one and thirty trading day timeframe:

TSLA1115A

The strongest price movement of +7.6% comes within twenty trading days when the company reports earnings that beat the whisper number, and -2.3% within twenty trading days when the company reports earnings that miss the whisper number. The overall average post earnings price move is ‘as expected’ (beat the whisper number and see strength, miss and see weakness) when the company reports earnings.

The table below indicates the most recent earnings reports and short-term price reaction:

TSLA1115B

The company has reported earnings ahead of the whisper number in two of the past four quarters with a whisper number. In the comparable quarter last year the company reported earnings one cent short of the whisper number. Following that report the stock realized a 7.1% gain in five trading days. Last quarter the company reported earnings fourteen cents ahead of the whisper number. Following that report the stock realized a 7.5% loss in ten trading days. Overall historical data indicates the company to be (on average within thirty trading days) an ‘as expected’ price reactor through when the company reports earnings.

WhisperNumber provides detailed earnings analysis and earnings trade alerts. Learn more here.

[Image courtesy of Gas2.org]

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By Sonya Colberg, TheStreetSweeper Senior Editor

After three down quarters in a row, Badger Meter (BMI) will have to dig like mad to suppress another big profit decline next quarter.

The water meter company recently reported year-over-year earnings dropped off a cliff – a teeth-rattling 18.6 percent. In fact, company leaders used the words “disappointing” or “disappointment” four times during the last conference call to describe financial results.

No wonder. The chart below shows Badger’s earnings performance.

(Source: Badger SEC filings)

And more disappointments loom. In fact, even normally optimistic analysts expect a 14 percent decline in earnings this year.

The company has not responded to a request for comment, but investors may find other viewpoints here.

Before we focus on several highlights, let’s look at some additional downside risks for the Milwaukee, Wisconsin-based water meter and flow-measuring technology company:

*Shares trade at a ridiculous 14.6 times EBITDA and 33 times Earnings Per Share.

*Stock currently trades near analysts’ top price target.

*Normally optimistic analyst firms have downgraded the stock or rank it a “hold.”

*Insiders are dumping company stock.

*Badger has a history of earnings misses.

*Badger blames Itron for its recent revenue disappointment.

*The cash position is only $4 million.

*Risks are exacerbated by razor-thin margins, fierce competition, economic softness, continuing inventory problems, bad weather and poor flow-measuring technology demand for oil rigs during the ongoing oil patch malaise.

* More Disappointments Poised To Spill Over Into Next Quarter

Understandably, analysts groused – and management whined – about recently released financials.

Robert W. Baird analyst Richard Eastman referred to the “lackluster” business and worried about next quarter.

“It’s pretty lackluster but does the business feel like a typical fourth quarter kind of seasonality …?” Mr. Eastman asked management during the earnings call.

CEO Rich Meeusen answered: “I would expect so with a little bit of a positive impact from the catch up.”

There are two interesting aspects of that verbal exchange. First, Badger expects seasonal doldrums because cold weather slows down construction and its municipal customers – customers already constrained by a soft economy. In fact, the company blamed snow, a hurricane and city budget concerns for a 53.5 percent profit plunge early in 2013.

Second, the catch up Mr. Meeusen referred to revolves around inventory piling up in the Badger warehouse and about $6 million worth of potential sales idled.

*Itron To Blame For Inventory Overload?

Badger offers its own old-style meters, or meters made “smart” by adding its own radios or the more popular radios made by Itron. The radio-meter combined is about $100 to $150. The meter sold alone is about $40.

Itron has dominated the area and in fact knocks down 30 percent margins versus Badger’s ~12 percent margins. But Itron had problems with the radios that resulted in a “product replacement,” essentially a recall.

So Badger primarily blamed its revenue miss – record sales of $99.4 million that fell below consensus estimates of $103 million – on Itron troubles.

“The continued weak dollar, the depressed oil and gas market and the delayed sales caused by the unavailability of radios from our alliance partner, all contributed to weaker than expected revenues,” CEO Meeusen told analysts.

Mr. Meeusen said he hopes that pile of inventory will be cleared over the next couple of quarters or so.

But if Badger’s radios are as good as Itron’s, why didn’t Badger just attach its meters to its own radios and save some blood, sweat and tears – and about $6 million in potential sales?

Management suggested that would be more difficult than it sounds because of compatibility issues.

“So generally if a customer had 40% of the city done with Itron, it’s very hard for us to convince them to suddenly start putting in ORION radios,” said Mr. Meeusen.

Maybe so, but Mr. Meeusen seemed to contradict what he said the previous quarter. He said Badger has “many customers” who buy Badger meters and Itron radios, and use the two together:

We have three ways that were impacted. One is that we buy radios from Itron and put them with our meters and sell them to customers. We also sell radios directly to Itron – we sell meters directly to Itron. They put them with their radios and sell them to their customers. And then the third way is we have many customers who buy the meters from us and the radios directly from Itron.”

Badger seems to be blaming others for a revenue miss that might not have been so bad if the company had just handled things a little better. And it remains to be seen if Badger can elegantly resolve this issue within several quarters or at all.

*Cash Deteriorates, Earnings Drop

The company shows some concerning financial trends.

Badger suffered a stunning 60 percent drop in cash over the past nine months compared with a year earlier.

(Source: Badger SEC filings)

* How Are Badger’s Margins? Pathetic

This is a slow-growth industry but Badger’s operating margins are also really bad.

Alarmingly, the most recent margins are among the worst in 10 years. Here’s the chart:

(Source: Badger SEC filings)

Margins are a huge worry because brass and copper make up the bulk of Badger’s expenses. And margins will be hurt when these costs jump and Badger can’t pass along the increase.

Noting most of the third quarter’s sales hop came from an acquisition, chief financial officer Rick Johnson told analysts during the recent earnings call:

“With the lower than anticipated sales, the lower margins and higher selling expenses, we reported lower earnings than last year.”

Get ready for more disappointing earnings.

*Badgered By Analysts’ Downgrades, “Hold” Ratings

While analysts tend to take a highly optimistic view of the companies they rank, Badger isn’t getting the warm fuzzies.

Zacks earlier this week ranked Badger a “Hold,” giving it a “B” for growth, a “D” for momentum and we think most significantly especially for long-term investors, an “F” for value.

Zacks noted lower margins, higher selling, engineering and administration expenses from the National Meter acquisition and high tax rate, plus that decisive earnings decline.

Robert W. Baird downgraded Badger in July to “Neutral,” just a month after Boenning & Scattergood also downgraded it to “Neutral.”

Interestingly, Badger rival/partner Itron recently got an upgrade to “Buy” from “Hold” and a price target increase from $35 to $45 per share from Canaccord Genuity.

*BMI Is Already At Price Target

The stock is already trading mere pennies below analysts’ tip-top price target. Indeed, these expectations seem exceptionally misplaced. After all, Badger is trading at nearly 16 times EBITDA and 33 times earnings per share, based on …what???

Here’s the price target summary:

(Source: Yahoo Finance)

Experience tells us that once the stock’s ripped to the moon, the teeth-gnashing drop will be sudden and soon.

*Historical Earnings Misses

Investors and Badger management can’t really blame analysts for their reticence when it comes to Badger. The company has quite a reputation for missing earnings.

*Fierce Rivals

Meanwhile, Badger is locked in a fierce battle with rivals ranging from private companies like Sensus, Neptune, Elster and Mueller as well as public companies like Roper Industries (ROP) and Itron (ITRI). This is a difficult, slow-growth business potentially fraught with issues amid a competitive environment. For example, rival-partner Itron has been dealing with recent issues including the product replacement costing about $25 million and the departure of officers. But even compared to currently troubled Itron, Badger isn’t faring well, as the chart indicates.

(Source: Yahoo Finance)

The chart above indicates that, in nearly all respects, Badger falls well below its publicly traded rivals.

And if we consider Badger’s stock performance versus its peer group, investors can see that a $100 investment in the peer group would have paid off better than the same investment in Badger. A $100 Badger investment would have reached $161 in 2014, while the peer investment would be worth over $183.

(Source: Badger SEC filing)

*Insiders Hit Sell!

Investors like to see that company executives have some skin in the game. But that isn’t the case here, as Badger shows an underwhelming level of management buy-in.

And these minimally invested insiders have dumped more than 60,000 shares of Badger just since May.  All buying is limited to executions of options as cheap as $18 per share.

Highlights from insider sales include:

*Chief financial officer Richard Johnson dumped ~25,000 shares in May, leaving only ~90,000 in his hands.

* Vice president of engineering, Fred Begale, unloaded more than one-third of his entire company stake in June.

* Last week, frequent seller and former senior vice president Ronald Dix sold another 1,000 shares. His holdings are down ~20 percent since February.

Here’s a snapshot of insider trading:

(Source: Nasdaq)

All that selling makes investors wonder: What is so wrong with the company that insiders want to dump the stock?

*Conclusion

This company is not far from a $1 billion market cap but holds $4 million cash and enough challenges to send it running for the nearest den. With so little cash in its paws, Badger must be thinking about a stock offering before too long.

Indeed, the deeper TheStreetSweeper digs, the scruffier Badger looks. We think a fair valuation for the stock would be about $37 per share.

* Important Disclosure: The owners of TheStreetSweeper hold a short position in MBI and stand to profit on any future declines in the stock price.

* Editor’s Note: As a matter of policy, TheStreetSweeper prohibits members of its editorial team from taking financial positions in the companies that they cover. To contact Sonya Colberg, the author of this story, please send an email to scolberg@thestreetsweeper.org.

Mobile Gaming Stocks ATVI KING GLUU ZNGA

The mobile gaming sector is drawing quite a bit of interest from investors this week. Not only are two big earnings releases on their way, but we also have a mid-sized acquisition drawing interest as well. Today, we’ll take a look at three gaming stocks that are worth watching as the week unfolds.

Activision Blizzard Will Acquire King Digital Entertainment

Activision Blizzard, Inc. (NASDAQ: ATVI) | King Digital Entertainment PLC (NYSE: KING)

Activision Blizzard recently announced that it will be acquiring King Digital Entertainment. The acqusition will meld two strong gaming companies together which is likely to prove to be a strong move for ATVI. Under the acquisition agreement, ATVI will acquire all outstanding shares of KING at $18.00 per share, bringing the value of the deal to $5.9 billion and signifying a premium of 26%. In a statement, Bobby Kotick, CEO of Activision Blizzard had the following to say:

The combined revenues and profits solidify our position as the largest, most profitable standalone company in interactive entertainment. With a combined global network of more than half a billion monthly active users, our potential to reach audiences around the world on the device of their choosing enables us to deliver great games to even bigger audiences than ever before.”

As a result of the acquisition news KING is trading up in a massive way; Unfortunately, ATVI isn’t sharing the same fate. Nonetheless, this is likely to prove to be an overwhelmingly positive move for ATVI in the long run.

Glu Mobile Releases Earnings Thursday

Glu Mobile Inc. (NASDAQ: GLUU)

Glu Mobile is expected to release its earnings report on Thursday. If this quarter’s report is anything like the last quarter, we can expect to see the earnings work as a catalyst in favor of GLUU. On August 4th, Glu Mobile reported earnings at $0.01 per share, beating expectations of a loss of $0.04. In the quarter, the mobile gaming company also beat revenue expectations by just under $5 million. Looking at the pre-earnings activity in the market on the stock, it seems as though investors are expecting another great report. So, now may be the time to start watching GLUU very closely.

Zynga Is Set To Release Earnings This Week As Well

Zynga Inc (NASDAQ: ZNGA)

Finally, Zynga will report earnings today after the closing bell. This is another report that investors are eagerly anticipating. That’s because ZNGA has a strong history of producing positive earnings surprises. In fact, over the past four earnings report, the company has averaged an earnings surprise of 15.48%, with the last report producing a surprise of 33.3%. In the quarter, the company is expecting to produce revenues of between $175 million and $190 million with earnings coming in around $0.01 to $0.02 per share. However, this is a company that has historically outperformed guidance. When the report is released, we can expect to see great things. So, get ready for a nice opportunity after the closing bell today.

[Image Courtesy of Wikipedia]

Plug Power PLUG Stock News

Plug Power Inc (NASDAQ: PLUG)

Plug Power had an incredible day in the market yesterday after a top Wall Street analyst mentioned the stock in a Tweet promoting an article that he will be publishing on Seeking Alpha. In pre-market this morning, it seems as though gains will continue. Today, we’ll take a look at the tweet, discuss what it is about the hydrogen fuel cell maker that likely has the analyst so excited, and talk about what we can expect to see from PLUG moving forward. So, let’s get right to it…

Top Wall Street Analyst Has A Positive Opinion Of PLUG

Yesterday, Matt Margolis, Chief Research Analyst at Wall Street Forensic looked to Twitter as a way to get his thoughts about PLUG out. Here’s what he had to say:

I’ll be putting out my thoughts later this week on $PLUG via SA detailing why the company is my #1 rated forensic pick… Stay tuned”

In the tweet, Margolis didn’t offer much by way of details with regard to why he’s so excited about PLUG, other than the fact that he would be publishing a post about it later on. Nonetheless, I’ve done some digging and the article is now live. Here are the hit points Margolic believes will drive PLUG upward…

PLUG Is Set To Start Shipping New GenDrives

The first thing Margolis talked about in his post was Plug Power’s GenDrives. These new GenDrives feature low power stacks and are set to start shipping in the fourth quarter. The new product features longer life cycles that are likely to improve gross margins. Ultimately, with regard to GenDrives, Margolis concluded that the new product is likely to have a “meaningful impact on service margins in 2016 and beyond.”

Less Reliable Models Being Phased Out

In his post, Margolis also explained that many of the products being used by consumers are older models. He expects for the older models to start being phased out and newer models brought in, which will of course lead to higher sales and higher revenues for PLUG.

Profitability

While PLUG hasn’t quite reached a point of profitability yet, Margolis expects for this to change relatively soon as well. In his post, he explained that the company has made necessary changes and is likely to reach profitability in 2016.

The Bottom Line

The bottom line here is that Margolis, a well-respected analyst on Wall Street, clearly likes what he sees from PLUG. I’ve also been following the company for quite some time now and I can’t see anything in his post that is misleading by any means. At the end of the day, PLUG is making the right decisions and is likely to grow moving forward. To read the full post on Seeking Alpha, click here.

What Do You Think?

Where do you think PLUG is headed and why? Let us know your opinion in the comments below!

Sprint S Stock News

Sprint Corp (NYSE: S)

Sprint is seeing massive declines in pre-market trading this morning, insinuating that today is going to be a rough day on the stock and its investors. As expected, S released its earnings report today before the opening bell. However, what was released in the report was anything but expected. Unfortunately, the company missed expectations with regard to revenue and earnings. Today, we’ll take a look at the earnings report, discuss the pressure being put on the stock and talk about what we can expect to see from Sprint moving forward.

Sprint’s Q2 Earnings: A Cause For Concern

As mentioned above, Sprint missed expectations in Q2 for both revenue and earnings. Unfortunately, the company is facing incredible competition leading to lack luster growth. Here’s what we saw from the earnings report earlier today:

  • EPS – As expected by analysts, Sprint produced a loss in the second fiscal quarter. However, the size of the loss was wider than expected. While analysts called for a loss of $0.09, the company actually reported a loss of $0.15 per share.
  • Revenue – Another miss for Sprint was revenue. Unfortunately, this figure has been slipping for some time now. This quarter, the company reported revenue at $7.98 billion, down from $8.03 billion and missing analyst projections of $8.12 billion.

The Biggest Problem Sprint Faces At The Moment

Unfortunately for Sprint (and other cell phone service providers), the landscape in the industry is changing. In the past, Sprint, AT&T, and few other companies dominated the sector. As a result, they were able to charge more for services, lock customers into contracts and more. However, that is no longer the case. As time passes, we’re seeing more and more discount cell phone service providers like Metro PCS, Wal-Mart Family Mobile, and others cutting the cost of cell phone service dramatically. This is ultimately causing the average price of cell phone service to decline while forcing Sprint and other companies to step up their game with regard to the services they provide.

How The Market Reacted To The News

We are still in pre-market at the moment. However, Sprint investors have already shown that they are unhappy with the results. Currently (8:51), S is trading at $4.46 per share after a pre-market loss of 8.43%. Unfortunately, it doesn’t seem as though today is going to end much better given the circumstances leading up to the declines.

What We Can Expect To See Moving Forward

Moving forward, Sprint is headed for a bit of a headache, however, the game isn’t over for the company just yet. I believe that in the short term, we can expect to see more declines. However, in the earnings report, we also learned positive news. For example, the company is cutting expenses by about $2 billion – a massive cut that’s likely to prove to be fruitful. In the long run, I’m expecting to see positive news from the stock.

What Do You Think?

Where do you think S is headed and why? Let us know in the comments below!

Biotech Stock News

Amgen, Inc. (NASDAQ:AMGN)

On October 28, 2015 Amgen had announced that it had received FDA approval for its skin cancer drug known as IMLYGIC. This drug is an injection type drug that helps boost the immune system to fight off and kill cancerous skin cells. This therapy only treats Melanoma — skin cancer– but does nothing for cancer found in the body. IMLYGIC is made up of the Herpes Simplex Virus type-1, which is a modified oncolytic viral therapy.

More specifically this type of therapy treats recurrent Melanoma. Recurrent meaning that the melanoma — skin cancer — continues to appear even after a patient receives initial surgery to remove it. As noted above the composition of this drug is an oncolytic viral therapy, and this is the first of its type to be approved by the FDA. Like many other cancer drugs the cost can eventually be quite high, but Amgen has stated that its therapy would cost about $65,000 for treatment.

This drug was approved because of positive efficacy observed in a phase 3 study, which was known as the OPTiM study. This study was measured using the primary endpoint in which patients were tested for durable response rates compared to a control. What is a Durable Response Rate — DRR? A durable response rate is the occurrence of when a patient either receives a partial response or a complete response from therapy. Receiving a complete response or a partial response involves the drug therapy either clearing the cancer, or partially clearing it.

In addition IMLYGIC received a positive response from European drug reviewers for a possible European approval. If all goes well and the EMA likes the efficacy/safety of the drug it could possibly be approved in Europe as well. We believe that Amgen still has some significant upside as its pipeline has been quickly growing with blockbuster type drugs.

Regulus Therapeutics (NASDAQ:RGLS) 

On October 28, 2015 Regulus announced that it had received its final milestone payment from Biogen (NASDAQ:BIIB) for its Multiple Sclerosis partnership. Regulus was able to get this last installment milestone payment by leveraging its technology platform to create microRNA profiles targeting MS. The technology platform used to disdoveer these MS microRNA profiles is known as the “microMarkers SM Technology”.

The reason for the collaboration was that Biogen believed that by Regulus using its own technology it could more accurately predict MS biomarkers that would improve efficacy of current drug products. Regulus is leveraging its technology to be able to target many other indications other than MS as well, which means some nice potential future growth in other key areas. Believe it or not this collaboration started way back in 2012, but it wasn’t until 2014 when Biogen was really interested in buckling down with Regulus in creating microRNA target profiles for MS.

Still, Regulus has been doing quite well with its own pipeline in creating combo therapies for its own Hepatitis C drug. The total amount of milestone payments that Regulus had received for this collaboration was $3.7 million. In the future Biogen will now decide if it wants to continue its agreement with Regulus to further advance the initial research both companies have come up with. We are inclined to believe that Biogen will probably continue its research collaboration with Regulus for one main reason.

That reason being that Biogen would like to keep its market share of  the MS market. That is because right now Biogen’s drug Tecfidera has a sizable market share as the leader in this category. In order to keep leading the MS space, Biogen will have to find ways to improve efficacy over its current drugs. This means that microRNA targets in MS might create a better drug product against MS. This would pave the way for Biogen to continue its leadership in this space.

Revance Therapeutics (NASDAQ:RVNC)

On October 29, 2015 Revance Therapeutics announced positive phase 2 data for their injectable drug, known as RT-002, that is being used to treat patients with glabellar lines. First, before we go any further we must know what glabellar lines are? Glabellar lines are wrinkles that form between the eyes, above the bridge of the nose and below the forehead. The company’s product, known as RT-002, is an injectable drug used to treat wrinkles.

RT-002  like BOTOX injection that comes from Allergan (NYSE:ACT), is a botulinum toxin Type A that reduces the expression of wrinkles on the skin. What makes RT-002 special over the current marketed leader BOTOX is that it is a treatment localized only to the injection site. This means that RT-002, unlike BOTOX, does not spread to the skin around the injection site. This provides greater efficacy at the point of injection improving patient outcomes.

The phase 2 trial known as the BELMONT study recruited up to 268 patients in total with glabellar lines. Each of these patients were randomized to either receive three doses of RT-002 or BOTOX — the placebo in the trial. The phase 2 results were nothing short of impressive because all three doses of RT-002 given to patients were shown to be superior in terms of efficacy to BOTOX.

None of the patients experienced any adverse effects so the drug was safe for them to take. The company’s technology platform is known as the TRANSIT peptide technology. What makes this technology unique is that not only can it deliver drugs as injections, but it can also deliver them in topical forms. This means that the company is working on other advanced drug products that could treat wrinkles with only a topical gel form.

This removes the need for injections in very sensitive areas for these patients. Drugs that treat wrinkles in gel form should be superior to injection drugs which can be quite annoying for the patient. Going forward we believe that this company has an excellent platform and will continue to advance its pipeline for FDA approval. We are not the management team of Allergan, but one must wonder that Allergan is probably watching this company like a hawk. There is no guarantee that Allergan wants to acquire this company, but if it wants to maintain its lead with drugs like BOTOX it just might have to.

[Image Courtesy of Idaho National Laboratory via Flickr]

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