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The stock has managed to remain stable for the last few weeks. The earnings had led to a fall, but $43 level held and it seems that the stock may remain around the current levels till the next major news flow. In fact, the last two earnings have led to large declines and taken the sheen out of the decent performance of the stock over the years. It has now fallen by 33% from its 52 week high made in February. The market for vitamins is expected to grow over time, and that growth may help Vitamin Shoppe in the long term. As per the recent survey, the number of Americans who take vitamin / supplement increased from 63% in 2012 to 64% in 2013. But for the stock to perform in the medium term, the company has to deliver positive surprises. This is especially true as the sentiments have been hit by the recent earnings. Viewed in isolation, the earnings were not bad with ~12.5% growth in revenues and ~14% increase in net income. More growth can be achieved through inorganic and organic expansion, and the margins can be increased by remaining open to new high margin products. Chromadex (CDXC) recently launched Nicotinamide Riboside commercially, and that molecule is expected to have a lot of potential. Similarly, other companies are also bringing out new interesting molecules from time to time. The smaller companies can sometime offer better margins, and if the products have potential, it becomes a good deal for both. The guidance was more responsible for the dampening of the sentiments. Lack of dividends is also another factor. However, the drop in price of the stock has made the valuations even more attractive. Now it is trading at 16.5 times forward earnings and price to sales is 1.35. The debt free balance sheet is also one more reason to be positive for the stock.
Several analysts have reduced the price target for Alamos Gold, but a recent article on SA is positive on the stock. The low costs, zero debt on books, dividend yield and a buyback program are the reasons for being bullish. The stock has fallen by around 40% from its 52 week high of $20.28 made in September 2012. Most peers have fallen much more, and are now trading below book value. Alamos is trading at around 1.8 times book, and even the forward P/E of 17.5 is higher than many gold mining stocks. But the zero debt on books and $490 million cash makes it less risky, especially in the current scenario. The revenues also continued to grow in the last quarter, though the net income declined by 12%. Considering the overall mood in the sector, the performance is not bad at all. If gold prices manage to hold $1200 and stabilize, then stocks like AGI can be expected to do better. A bounce in gold is expected to lead to a greater bounce in stock prices. Marc Faber had stated that a 20% rebound in gold prices can lead to doubling of some stocks. Valuations of development stage companies like Pershing Gold (PGLC) have been hit even more, and many are trading at a significant discount to potential. Jim Rogers had stated last month that he would be a buyer in gold at $1300. Further, the sharp bounce in gold mining stocks over the last two days also signals that it may not be that easy for the prices to correct further. There may be stronger supports. Surely a couple of days of bounce can not improve the sentiments, and more days of bounce and consolidation are required to get confident. In the short term, it is possible that the stocks may settle in a range if gold remains above crucial levels.
The recent declines in gold have taken it to levels where the possibility of a rebound are high. The last leg of the fall of 15% in gold prices has led to 25% decline in prices of gold mining stocks. There has been a decent rebound in the last two trading sessions, with several gold stocks risking by 10-15% on high volumes. Most would consider this a technical rebound from oversold levels, but it is possible that the up moves may continue. The recent break down point will prove to be a resistance, but that is still about 10% away from the current levels. IAG has shown growth in revenues and net income over the years, but the consistency could have been better. Last quarter reflected a decline in revenues and net margins. The cash costs were, however, better than expectations ($787 per ounce). The correction has improved the valuations significantly, and most stocks are trading at a discount to book value. Development stage companies like Pershing Gold Corporation (PGLC) are available at even cheaper valuations. IAG is trading at around 7 times forward earnings and price to sales and price to book is 0.95 and 0.41 respectively. The debt on books was around $639 million, while the cash was $666 million on March 31. IAG has a good dividend yield which makes it more attractive. Most analysts have a hold / buy on the stock and the price targets indicate good prospects of capital appreciation. RBC Capital has a price target of $7 on the stock. The key to change in sentiments is a rebound in gold prices. Jim Rogers had recently stated in an interview that he would be a buyer at $1300. Marc Faber had stated in an interview that a 20% rise in gold prices can lead to doubling of prices of select stocks. So stock selection is important, and IAG may be a good bet.
Most gold stocks have fallen by more than 50% from the recent highs. Agnico is also down by 52% from the 52 week high made in November 2012. The recent bounce has taken it 10% higher with good volumes. The price action over the next few days will determine whether this is a technical bounce or the rebound will last longer. Stability in gold prices is the key to a sustained uptrend in the gold stocks. $1200 has provided support, but needs to be tested a couple of times before one can be confident. The recent leg of fall has been damaging as most stocks have corrected by 20-25%. The valuations are better, but Agnico is still trading at ~17.5 times forward earnings. The price to book is 1.26, which is higher than most stocks at this time. Still it is not too high. Several precious metal stocks are trading below book value now, and the development stage companies like Pershing Gold Corporation (PGLC) are trading at a discount to potential. Some notable investors are getting less negative on the sector. Jim Rogers had recently stated that he would start buying when gold touches $1300 and buy more if it touches $1200. Others are also expecting a rebound in gold due to expected devaluation of the currencies. Marc Faber had stated that a rebound in gold prices would lead to a much stronger price movement in the mining stock prices. Considering this, it is possible that the bottom may be around. Several analysts are negative, but the astute investors are getting more positive. Next few weeks will provide an indication of the near future. If the recent lows hold, then a new range may be established. That appears to be a good enough outcome if one takes into account the prevailing sentiments. Range bound movement will help in adding stability to the rocking boat.
The recent bounce has taken EGO up by 9%. The volumes have been very high during the last two days. This can be a technical bounce, but it is also possible that it may extend for a few sessions. If that happens, it could lead to a new range with the recent lows being the support. The highs could be around $6.8. All depends on how the gold prices behave from here on. Many are getting relatively positive on the sector. Jim Rogers had indicated in May that he would buy gold if it reaches $1300 and more if it touches $1200. The expected devaluation in currencies is making people optimistic that gold may make a comeback. No body can be sure about this, but it is certain that the valuations are much better than what they were a couple of years back. EGO is down by 51% on a 52 week basis and is trading at 70% of the book value. Most other gold companies are also trading below book values and the development stage companies like Pershing Gold Corporation (PGLC) are available at even lower valuations. The leverage position of EGO is also better as compared with some of the peers. The revenues and net income have grown over the years. The last quarter, however, was bad with lower revenues sequentially, and a net loss. However, such gloomy times are usually the best time to buy. Not many would dare, because the risk of further crash in gold prices can have cascading effects. In hindsight, things may look different. EGO's exposure to different political environments in world also makes it a little different compared with peers who have presence only in the US. Let us see how this goes over the next few days. If $1200 holds again, there may be some stability.
The stock has been badly hit over the last couple of years. While most stocks have declined by 50-60%, ANV is down by more than 80% over the last two years. The declines have been higher than most gold stocks because Allied Nevada's huge expansion plans have not been supported by gold prices. The exponential growth in the revenues and net income, and rise in gold prices had taken the stock to extremely high levels. The recent high of $41 had stretched the valuations, and the price was factoring too many positives. However, now the stock may be at the other extreme, and the valuations may be getting attractive. Key to change in fortunes is rise in gold prices, but the company also has its own peculiar problems which make it relatively riskier. The recent rebound in gold mining stocks has taken Allied up by 20%. The volumes were huge and hence it is possible that the momentum may continue for a few sessions. Many will term it as a dead cat bounce, but recent bounces (before the latest leg of the fall) in other gold stocks have lasted longer. The $1200 level in gold may provide some support. Legendary investor Jim Rogers had indicated that he may start buying when it is at $1300. Even others are a bit more positive. More on this will be known over the next couple of weeks. The valuations are surely better than what they were a few quarters ago. Most gold stocks are trading below book value and development assets like Pershing Gold Corporation (PGLC) are trading at a discount to potential. However, not many may dare to dip now, and would like to wait and watch. The sentiments may take months to improve, and hence there may be lot of sideways movements even after things stabilize. Next few days will be important.
There has been a good bounce in the last two days. New Gold has recovered by 12% from its lows of $5.70. Though this looks like a rebound from oversold state, it is also possible that the bounce has a longer leg. The crack from the previous lows led to sudden and sharp fall, and $1200 was tested in gold. This remains an important level and needs to hold. Few would agree, but the bottom may not be far. Jim Rogers had stated in May that he would start buying when it hits $1300. George Soros, Jim Grant, Marc Faber, all have relatively positive views on gold now, with the presumption that the devaluation in currencies will help gold make a comeback soon. Like in the previous leg of the correction, gold mining stocks may again settle into a range with the recent lows (or slightly lower) lending strong support, and the breakdown point being the highs. That itself is a large enough range. The mining stocks are now down by 50-60%, and most are trading below book value. The sentiments are negative and hence development stage stocks like Pershing Gold (PGLC) etc. are trading at a discount to their potential. New Gold has fallen by more than 50% in one year, and 30% in the last three months. Fundamentally, New Gold has done well over the years with good growth in revenues and net income. However, the growth had slowed down in the last quarter on a yoy basis, and there was a decline on a sequential basis. Considering the situation and the performance of several peers, the performance was relatively good. The P/E is below 14 and it is trading around book value. So the immediate future appears to be volatile, but one can hope for better times soon.
The news about the new patent is positive. Further, fixing of the Markman hearing date in the lawsuit against casino gaming companies has increased optimism about the future of the company. The date has been fixed for June 5, and the stock is expected to remain active over the next few months. This reduces the uncertainty in the minds of the investors, and indicates that, prima-facie, the claims have substance. Further, the defendants are more likely to approach MGT for a settlement. They may have been waiting in anticipation of a ruling in their favor. While the case will go through the legal process over the next few months, the company is likely to focus on building the businesses related to daily fantasy sports and skill-based video games. Appointment of high profile executives has added to the expectations. Daily fantasy sports is expected to grow exponentially over the next few years. MGT can take advantage of the growth if it is able to develop the website further and increase marketing efforts over the next few months. The management had announced that it will make significant progress in the skill-based video games business with launch of the beta version of the platform by the end of this year. Even that business has a lot of potential. If the company is able to take advantage of the growth in these segments, then it will be a game changer in the long term. The daily payout system of fantasy sports sounds more attractive as compared with the longer version. So more people are likely to get attracted towards it. The high growth will also bring in competition, so MGT has to move fast to make a place for itself. Companies like Yahoo and Comcast are already putting in money and may soon get more interested in shorter version.
Recent analysts opinions have been conflicting. While the Street has upgraded it to hold, Zacks had downgraded it to strong sell. While some analysts are positive about the fact that the company is entering into new agreements, others are expecting margin pressures due to the deals. The company' joint venture entity (Northstar New Jersey Lottery Group) recently signed a 16 year agreement with New Jersey Lottery to provide marketing, sales and other services. Earlier, SGMS had signed a five year contract with the South Carolina Education Lottery to provide instant ticket and cooperative services. The fact that these contracts keep happening is good for the company. As per analysts, this reflects that it is able to take advantage of changes in the lottery industry like more 'involvement of private vendors in state lottery management, higher prize payouts and introduction of tiered pricing for national jackpot games'. It is also anticipated that these deals may adversely affect the profitability of the company in the short term due to product development expenses. Further, increase in regulatory, professional fees and other expenses related to the WMS acquisition will also add to the margin pressure. In addition, the Markman hearing date in the patent infringement lawsuit filed by MGT Capital Investments (MGT) against WMS subsidiary has been fixed. That will remain an overhang going forward. However, the stock has done great for the investors over the last few months. It is up about 45% in the last two months, and has appreciated by 32% on a 52 week basis. The relatively poor earnings did not matter much, and the uptrend has only strengthened after that. Ultimately, what is important is the returns got by the investors. So full marks to the stock so far. If the market holds on, it may even go higher. However, the stretched fundamentals have to be kept at the back of the mind.
The results of the last quarter added strength to the uptrend and the stock is now more than 50% up on a 52 week basis. On a longer term, it has been a multi-bagger with exceptional returns over the last 4 years. The net income has multiplied by more than 7 times from $226 million (2009) to $1.634 billion (2012). Even in the last quarter, there was a good 24% growth in EPS with a 6% growth in revenues. Amongst the analysts, Bank of America Merrill Lynch has the highest price target of $60 for the stock. The stock is now trading at 19 times ttm earnings and around 14 times forward earnings. The PEG ratio is also around 1.3 which indicates reasonable expectations of growth in the next few years. The entertainment segment contributes maximum to the revenues, and in last quarter it contributed $2.5 billion out of the $4 billion. The segment contributed $480 million to the OIBDA of $916 million. The cable network, which has the Showtime Networks, CBS Sports Network, and Smithsonian Networks, reported higher margins with OIBDA of $231 million on sales of $478 million. The segment contains businesses like fantasy sports which have good growth potential. Fantasy sports, especially the daily version, has attracted interest & investment from Comcast (CMCSA) and MGT Capital Investments (MGT). The outdoor advertising business has remained a drag on earnings in the last quarter. European and Asian outdoor businesses are expected to be sold within this year. For the American outdoor business, the company has already submitted a request to qualify the business as a real estate investment trust (“REIT”). It is planning to bring an IPO for selling minority ownership of the business. The expected growth is likely to help the stock continue its good performance over the next few quarters, provided the markets remain stable.
Over the last one year, the stock has done great for the investors. It is up by more than 68% from its 52 week low in September. There are hopes of improved business performance, and that has been the key driver for the appreciation. The revenue guidance is for $4.5 to $4.6 billion in the current fiscal which is 10% lower than last year's $4.986 billion, but the operating income is expected to double from $566 million to $1.1 billion. The focus over the last one year has been on getting talent with acquisition of small companies, and better cost control. Size of the acquisitions has increased with Tumblr, though some smaller acquistions like Xobni and Qwiki may take place within this year. Cash is not an issue, and the CEO may look for more. The growth in share price over the past few quarters has increased support for her strategy. Over the next few years, the company is expected to reduce sole dependence on advertising revenues and depend more on its search-engine business and alternative business models. It has dabbled into other areas like Fantasy sports with companies like Comcast (CMCSA) and MGT Capital Investments (MGT) also increasing interest in the high growth space. Currently, the ad revenues are not doing that great, and the search engine is not going to beat the winners any time soon. Increased usage from mobile devices is the main hope of several biggies like Google (GOOG) and Facebook (FB), and Yahoo also plans to expand its 300 million users base. Tumblr is its social networking hope. Many analysts prefer Yahoo to relatively overvalued tech / social networking companies. However, the competition can not be underestimated and Facebook and others are surely working overtime to lift their fortunes. If the markets remain stable, it may attempt to reach higher. The recent highs will be the real test.
The last quarter earnings for Medtronics added some strength to the stock. Compared with a correction of more than 10% in most stocks, it has remained relatively stable over the past few weeks. It is only 4% below its 52 week high of $53.83 made a few days ago. It is trading above important levels, and sustained improvement in the mood of the market can help it challenge recent highs. The full year guidance of 2014 was raised to $17.1-17.3 billion which indicates expectations of 3% growth. In the last quarter, the company reported revenues & net income of $4.46 billion and $969 million respectively. For the full fiscal year ending April 26, 2013, it reported revenues of $16.59 billion and net income of $3.467 billion. Going by the guidance, the growth in stock is likely to be modest over the next few quarters. Further, the markets have to remain stable to positive. Deeper correction in the market may dampen the overall sentiments and even strong stocks may give way. Medtronic has done well over the years for investors, and the growth in the stock has been backed by fundamentals. However, there was some slowing of growth in the last year. It is trading at around 15 times ttm earnings and the forward P/E is only slightly lower at 12.5. This again indicates that growth expectations are not that robust. Growth in revenues has always been supported by launch of innovative products by the company. Innovation is the key for success in the sector and even smaller medical device companies like PLC Systems (PLCSF) are showing promise based on innovative products. Majority of sales of Medtronics come from US and Europe, but emerging markets are also expected to contribute more in the years to come. Emerging markets was the fastest growing region for the company with 21% growth in revenues in 2012.
The stock is now down by more than 11% from its highs. This is the trend with most pharmaceutical stocks as the corrective mood in the market has added to the pressure from profit booking. The weakness in Covidien is highlighted by the fact that it is trading below crucial levels and bounces have not sustained so far. Over the years, the stock has done great for the investors with good appreciation from the lows of around $28 made in 2009. The returns have been good during the past one year also, and stock is still up by 16% on a 52 week basis. The correction has reduced the pressure on valuations and now it is trading around 16 times ttm earnings. Over the years the growth has been more uniform and the revenue and net income have grown. However, there has been some tapering off recently. In the last quarter, the sales had grown by about 5%, but the net income had fallen by about 12%. Future success depends on its ability to deliver new devices / drugs from time to time. Medical devices comprise 68% of its sales and hence it is imperative to bring innovative products to support growth in revenues. Even smaller medical device companies are bringing out interesting products like RenalGuard from PLC Systems (PLCSF) which has got several patents from US / Europe. Covidien recently announced good progress in trials of some of its products. Its Kendall SCD system with Vascular Refill Detection Technology was found to be effective in decreasing development of proximal deep vein thrombosis (DVT). Analysts remain positive on the stock with Goldman Sachs (GS) expecting acceleration in sales and earnings from the second half of FY14. The analysts have a consensus buy recommendation on Covidien with the average price target of around $72 (17-18% appreciation).
Like most pharmaceutical stocks, Pfizer has corrected from its highs over the last few weeks. It is down by around 10% from its 52 week high made in April, and is precariously close to the crucial averages. A sustained rebound is critical, otherwise the stock may become much weaker. The mood in the market has surely dampened sentiments, and that has put pressure on the stock. The volumes over the last few days have be abnormally high and the offering related to the Zoetis shares is likely to be a factor going forward. There is some pressure on the downside which could also be attributed to the correction in the market. The stock performance over the years has been good, and it has been on a relatively secular uptrend since 2009. The dividend yields have remained good and the consistency of the payout is one of the reasons for owning the stock. Effect of the separation of the Animal Health division will be clearer over the next few quarters. Now the company has given a guidance for adjusted earnings per share between $2.1 and $2.2, and the revenue between $50.8 billion to $52.8 billion, which is a lower than the previous guidance issued a few months ago. Future growth will depend on how it is able to bring new products to the market. Innovation has been the key to survival and growth of Pfizer over the years. Even smaller companies like PLC Systems (PLCSF) are trying to create a market for new products created by their proprietary technologies. After the rebound today, the stock is trading at a P/E of ~13.4 with the forward P/E being less than 12. If the market remains sensible, the stock may revert to the growth path soon. In the short term, more positive days are required to improve the sentiments.
Like several pharmaceutical stocks and the overall market, Abbott has corrected over the past few weeks. It is now around 9-10% from its 52 week high of $38.77 made a month ago, and has broken below some important levels. Jefferies had recently reduced the price target to $44, which indicated a little mellowing down of expectation. Even Goldman Sachs has the same price target. The stock is still up by 17% on a 52 week basis. The consensus price target is just below $40 and that is about 16% away. The main geographical region for growth is likely to be the emerging markets which contributed around 40% to the sales in 2012. This is expected to rise to 50% by 2015, with focus on the main segments like diagnostics, medical devices and nutrition. However, after the separation of AbbVie, some high growth products like Humira are with that company, and hence the growth may not be that easy. Innovation will be important. Abbott has more than 30 medical devices under development, and has a good pipeline of products. New products are the key to success of pharma / medical device companies. Even smaller companies have done well with proprietary technologies. PLC Systems (PLCSF) has a product RenalGuard for Contrast Induced Nephropathy for which it has obtained numerous patents around the world. There are several other innovative products which are helping the companies build strong IPR portfolios. The recent correction in Abbott has improved the valuations and it is no trading below 11 times ttm earnings and 1.36 times sales. The separation of AbbVie is expected to make a dent on the dividend yield, but expectations of growth are still very much there. Further growth in the stock will depend upon its fundamental performance and also how the overall market plays out. Going by the past history, it should be able to meet expectations and deliver consistent growth.
Let us see what the company says next week. The author of the SA article seemed pretty confident.. Thanks..
AngloGold is now below the 2008 lows and the not too far from the all time lows made several years ago. Many stocks in the sector are doing equally bad, and the fall during the last few days has hurt the sentiments. Though there was a rebound on Friday with volumes, the movement next week will determine how things move from here on. Some are predicting more pain, while many are now saying that the fall may have become excessive and the bottom may be near. Some notable investors like Jim Grant, Marc Faber and George Soros are slightly more positive on the sector. The sentiments may take some time to improve, but it seems that the crash over the last few months is now getting overdone. Most companies are trading at a discount to book value, and almost all gold / silver stocks have halved from recent peaks. AngloGold is also trading just around book value. The low valuations in the sector have prompted some acquisitions by bigger companies. Some have purchased stake in development stage assets, and there have been deals in the streaming / royalty segment also. These stocks are available at attractive valuations. Coeur had hinted at some acquisitions in the properties surrounding it in Nevada. It already has a stake in Pershing Gold (PGLC) which a development stage company expected to start production next year. Prior to last week's fall, there was some stability, and the stocks had begun to trade in a range. Reduction in quantitative easing was already on the cards and many were expecting that to happen by year end. So the fall was a bit surprising. In any case, now the stocks are trading at crucial levels and it is important that they stabilize and consolidate. Next week will be interesting to see how the markets and the gold stocks behave.
The fall last week was strong, and has definitely dampened the mood. Prior to the fall, the gold stocks had started to become more stable and were trading in a range. Yamana has also been adversely affected by the fall in gold prices over the last few quarters with substantial drop in net income in the last quarter. The revenue had also fallen on a yoy basis. Even in 2012, the net income had fallen in comparison to the 2011 performance. The long term debt has also increased slightly, and that may be a matter of concern. The stock is now trading at a discount to book value. The sentiments may take some time to improve, but there are more voices from experienced investors which are getting less negative. Marc Faber recently stated in an interview that if gold prices rise by 20%, some of the beaten down stocks may even double from the current levels. There was news that other notable investors like George Soros and Jim Grant were getting more positive on the sector. Many believe that the excessive money printing will ultimately lead to devaluation of the currencies, and hence gold prices may rise. Most stocks are now trading below book value and many are around the 2008 lows. This does indicate that the fall over the last few quarters may be getting a little excessive. The probability of a rebound is increasing. There have been some acquisitions in the sector with bigger companies acquiring stake in smaller companies to take advantage of the low valuations. Coeur 'D Alene (CDE) had taken a 5% stake in Pershing Gold (PGLC) a few months ago, and hinted at increasing interest in some other properties in Nevada. Franco-Nevada got some royalty rights in Midas Gold, and there were some deals in the streaming segment also.
Despite the fact that Davita has appreciated a lot over the past one year, several analysts remain bullish on the stock. The consensus price target of $128.83 indicates a possible upside of about 5% from the current levels. Jaffray has a overweight rating with a price target of $135, Deutsche Bank has a PT of $136.00, Zacks $133.00 and Sanford C. Bernstein $131.00. The reason for the optimism stems from the good fundamental performance of the company over the years. The company had beaten analyst estimates for revenues and net income in the last quarter. The EPS came in at $1.84 compared to the estimate of $.180 by Thomson Reuters. The revenues had increased from $1.84 billion to $2.82 billion (~53% rise). That had led to a huge uptick in the stock, and it had subsequently touched its all time high of ~$131. EPS for 2013 is estimated at $7.52. The forward P/E of 15.53 (ttm P/E of ~29) also indicates good growth expectations over the next two years. It has rewarded the investors with great returns already, and the stock has appreciated by 30% on a 52 week basis. Key to further growth in the stock is improvement in fundamentals. Furthermore, improvement in company's services and offerings will also be an important factor in improving growth. Innovations are common in related fields, and a small company PLC Systems (PLCSF) has recently obtained several US and European patents for its proprietary product RenalGuard useful in Contrast Induced Nephropathy (CIN). DVA has to remain open to innovations in the dialysis services happening around the world. The full year financial impact of recent acquisition of HCP will be visible in 2013. The debt on books has increased substantially during the last year, and that will be an area of concern going forward. Interest payments may put pressure on the margins.
Obtaining the patent for the “Patient Hydration Method” from the US is an important milestone for PLC Systems. The company had mentioned this to be an important step in achieving its long term goal of making the product commercially successful. This is in addition to the several US, European and other patents for the product. The earlier US patents cover the RenalGuard technology and include the method patent for the use of matched fluid replacement with diuresis for prevention of Contrast Induced nephropathy (CIN). It also has concept patents covering “creating and maintaining equilibrium state urine flow to eliminate iodine”. The new patent strengthens barriers to entry, and increases the size and depth of its IPR portfolio related to RenalGuard. The new patent covers the use of the treatment method and the device. RenalGuard is increasingly becoming known for its efficacy in protecting kidney from toxic effects of drugs used for treatment of certain diseases like cancer. Contrast Induced Nephropathy is an indication which has a lot of commercial potential. If the product becomes the standard of care in the reduction of incidents of acute kidney injury, then the long-term future of the company may change. However, positive progress in the trials in US is likely to be main trigger for the stock. It is crucial that there is some development on that front so that there is more awareness about the product and its efficacy in various conditions. In a recent conference in Europe, the product received good reviews for its use in patients undergoing Transcatheter Aortic Valve Implantation (TAVI). The company was able to sell its Heart laser in 2011 for a good price, and decided to concentrate solely on RenalGuard. The sales of RenalGuard have grown and Europe remains the main commercial market for the product. Zacks Small Cap research had given it a target of $0.35 in its report earlier this year.
The fall in the prices of gold over the past few days has adversely affected the sentiments. Many are predicting that the weakness may last for some time, but there are some who are indicating that the bottom may be near. Legendary investors like George Soros, Marc Faber and Jim Grant are relatively more positive. They expect that gold may rebound as the massive money printing will surely lead to devaluation of the currencies. Gold may not fall too much from here. Marc Faber stated that if the gold prices rise by 20%, some of the beaten stock could rebound strongly, and may even double from here. Another perspective is the comments from the Fed did not offer anything remarkably surprising. Many were already expecting a slowdown in the easing by the end of this year. So the reaction was overdone. Chairman of Franco-Nevada (FNV) has also expressed similar sentiments in an interview. While he remains positive on the prospects, he stated that the impact of the fall in gold prices is more severe in companies which started mining too low and for lower grades when the prices were high. This increased the overall costing of the mines, and the operations became difficult when the prices crashed. A SA article had recently estimated cost of production in Pershing mines at $900 per ounce. There were calculations about the cash flow based on 50,000 oz. of production in the first year, which indicated that things may change dramatically if the production starts as per the plan. The company may require strategic investors to ensure that it reaches that stage comfortably. Things will become easier if the gold prices stabilize and the sentiments improve. However, even at current levels most companies are now trading at a severe discount to potential. Stabilizing of the prices is the key.
Please read nephropathy in place of neuropathy in my previous post. Apologies..
Please read nephropathy in place of neuropathy in my previous post. Apologies..
A seekingalpha article mentioned that a court ruling may have fixed the Markman hearing in the patent infringement lawsuit against casino gaming companies. This is a huge positive for the company. The press release or official confirmation from the company is awaited. Going by the huge upward movement in the stock on Friday, it appears that the traders may be aware of this news. The huge volumes on Friday also indicated the strength of the move. The relatively negative sentiments in the market did not affect the stock. Once the news is confirmed next week, then the stock may take off to higher levels. The stock has given good returns during the past few months, and as per the article, this may just be the beginning. The author has predicted exponential returns over the next few months. The quantum of the appreciation may be debated, but it is clear that this is an important hurdle to cross. Once the court rules in favor of a Markman hearing, it becomes more probable that the case will go to trial. Fixing of the Markman hearing date adds to the momentum as the defendants are more likely to consider a settlement after this stage is cleared. Earlier there was speculation that SGMS may settle with MGT, and now the probability of that may increase. The other giants like CZR, MGM, PENN may also weigh their options. So after the confirmation, the interest in the stock will surely increase. Further, the recent acquisitions and hiring of top management has also increased the awareness about the company. Fantasy sports has attracted attention of big companies like Yahoo & Comcast due to the huge growth potential. In some ways, focus on these businesses is a bigger positive for the long term future of the company. Next week will be interesting.
Please read Marc Faber for Jim Rogers.
As per recent news, Freeport has resumed open-pit mining at its Grasberg Complex in Indonesia. This is a small positive after the crash in gold prices this week. Friday saw a rebound amongst many stocks in the sector, and the volumes were also good. Freeport also rebounded from the lows and it will be interesting to see if it can maintain the momentum for a few days. Still, it may take a few weeks for the sentiments to change. Fed's comments, or its interpretation, led to the sell-off. Many were already aware that the slowing down in QE would happen by December this year, so the reaction was a little overdone. Prior to this week's declines, the stocks had stabilized and were trading in a range, with supports holding a couple of times. The crash over the last few months has resulted in several companies trading below book value. Even big investors like Jim Rogers have expressed some positive views on the prospects of gold. In fact, the dip in the prices has prompted many companies to scout for assets in development stage companies which have reached attractive valuations. Coeur 'D Alene (CDE) had hinted at acquisitions of smaller companies in Nevada. It already has a stake in Pershing Gold Corporation (PGLC) which is a development stage company expected to start production next year. Some streaming / royalty companies have also entered into contracts to take advantage of the low prices. Chairman of Franco Nevada (FNV) had expressed optimism about the prospects of precious metals. He had stated that the problems of the sector are more linked to the fact that the companies got a little carried away and started mining lower, and for lower grades. The high cost of those operations made the overall costing difficult to sustain when the gold prices corrected. This added to the impact of the decline on the sentiments.
Royal Gold stock fell strongly during the week, but managed a sharp rebound with good volumes on Friday. Fears about reduced QE from the Fed may keep the gold / silver prices under pressure. The stocks have made new lows and gold fell 7% during the week. This fall came after a relative period of calm which stretched over a few weeks. The fall was sudden and surprising. Most precious metal company stocks are way below their book values, and it seems that the sell off is overdone. Many investors like George Soros and Jim Rogers are getting a bit more positive about the prospects of the precious metals. They argue that devaluation of currencies will ultimately increase the price of Gold, and the stocks will rebound sharply if that happens. Jim Rogers has stated that a 20% rise in gold prices may lead to doubling of some gold stocks because they have been beaten down so badly. Gold may be closing in on levels where it may start to find buyers. Some bigger companies are acquiring assets of development stage companies which are now trading at very attractive valuations. Coeur 'D Alene (CDE) has hinted at some acquisitions around its properties in Nevada, though it has not put a timeline or mentioned company names. CDE already has a 5% stake in Pershing Gold Corporation (PGLC), a development stage company in Nevada which is expected to start production of Gold in 2014. Even streaming / royalty companies have gone for some purchases recently. However, the break below recent lows is a little unsettling and the sentiments may take some time to stabilize. Usually, the gloom or the boom is overdone, and that is the best time for buying / selling. Of course, not many can dare right now, but in hindsight things may appear different.
You can't argue with stocks which make historic highs all the time. Several pharma company stocks have recently been in the habit of doing so. BDX is also doing very well for investors, and has delivered good returns over past several years. The stock appreciated 32% during the last year, and is only ~6% below its all time high of ~$102 made recently. The dividend history of the stock is also great, with a good 2% yield over the past 5 years at a reasonable 25% payout. Fundamentally, the revenue growth has been very good over the past few years. The net income, however, has remained static and shown some declines recently. The operating margins are around 20%. Despite the great growth, the trailing P/E is less than 13 which indicates reasonable valuations. Future growth in fundamentals will be the key to continued appreciation of the stock. But the forward P/E and the high PEG ratio indicates that the growth expectations in the medium term are not very high. BDX is basically relying on new product launches, licensing and network expansion etc. for future growth. The new products will help it bolster growth and further build its IPR portfolio which is always so crucial. A smaller medical device company, PLC Systems (PLCSF) recently obtained several patents for its single proprietary product RenalGuard which is used for contrast induced neuropathy. Patents are important assets for the medical device companies, and can help in increasing sales and generating regular stream of licensing revenues. BDX's new products like the cytometer and the injection for diabetics are also expected to do well in the market. Innovation is the key to long term success. If the markets hold, then one can expect reasonable returns. Slippages can lead to some profit booking so the fundamentals have to keep pace.
Though it is up only 7% on a 52 week basis, it has shown a good 20% appreciation from its 52 week low made in January. So the short term investors may not be complaining. Even on a longer term, the stock has tripled since May-June 2009. The revenue growth has been good, and the company has done well on the net income recently. In the last quarter, the revenues had grown by 15% and the net income had increased by 55%. It recently ventured into the daily fantasy sports by investing in DraftStreet, a smaller company engaged in the shorter version of the game. The daily fantasy sports wagering segment is picking up fast with smaller players like MGT Capital Investments (MGT) committing funds. Bigger players like Yahoo (YHOO) and Comcast (CMCSA) have also invested money. Comcast invested $11 million in Fanduel.com through its venture capital arm. MGT has invested in Fanthrowdown.com, which is more focused on the daily segment. The concept of instant gratification in the shorter version is catching up, and is expected to show exponential growth over the next few years. DraftStreet had already got funding from Atlas Ventures recently. IACI will surely benefit from the growth story as it has entered at the initial stages. As per estimates, on an average a site takes 10% cut in the prize money. However, the benefits may be visible over the longer term as the exposure taken by IACI is indirect. The forward P/E of 10 (fye 2014) and PEG of 0.39 do indicate that the valuations remain reasonable, and there is expectation of growth over the next few years. If the fundamentals support, the growth in stock may be better in 2013. Of course, the underlying assumption is that the market will remain sensible and there are no negative surprises from the company.
The fall yesterday was with increased volumes which was in line with the overall sentiment in the market. It has fallen about 33% from its 52 week high made in March, but still remains nearly 180% above the lows. Thus, the stock has done well for the investors in the short term. This is despite the fact that the company has continued to report losses since many years. So while the investors may not be complaining, it is not going to be too easy from here on. The growth in the stock has not been supported by improvement in fundamentals. The accumulated deficit is increasing and the net worth is negative. If the correction in the market runs deeper, then the possibility of a lot of profit booking in CZR exists. It is looking weak and is poised around crucial levels. Further, data shows that high levels of shorts are being maintained by traders. In addition, there is some news expected on the lawsuit filed by MGT Capital Investments (MGT) for patent infringement by CZR' subsidiary. The lawsuit has been filed against several casino companies and the potential claims lie between $300 million to $4.5 billion. Negative news on that may also put downward pressure on the stock in the short term. Fundamentally, the biggest worry is the huge debt of $21.56 billion and the consequential interest payout. Compared to a revenue of $8.5 billion and an operating margin of 10%, the leverage appears very high. The revenues have also fallen over the years. The expected growth in the market segment may help increase the revenues, but improving net margins is the key to success. All this appears to be extremely difficult considering the huge leverage and operating performance of the company. Positive surprises are required for the stock to regain momentum.
The overall mood in the market yesterday added to the momentum of the fall. The volumes were extremely high and the cut was pretty deep. MGM is still up nearly 60% from its 52 week low made in August, and hence it has done well in the short term. On the longer term, it has been pretty much range bound for several years. The lower end is around $9 and the higher end is around $15.5. The revenues have shown good growth over the years, but the company has reported net losses, except in the last quarter where it managed to break even. Like most companies in the sector, debt is a major worry for MGM. As on March 31, the debt was $13.69 billion which is high if one takes into account the revenues and the operating cash flow. Future ventures of the company are also likely to involve investment in infrastructure through equity or debt. The indoor arena off the Las Vegas Strip is also expected to cost them $350 million over the next few years. Thus the stock price may remain under pressure. The lawsuit filed by MGT Capital Investments (MGT) is also an overhang and some news is expected on that shortly. If the news is negative, this may put some pressure in the short term. The lawsuit involves several casino gaming companies, and the estimated value of the claim is between $300 million and $4.5 billion. A deeper correction in the market may also lead to increased pressure on the stock and it may correct due to profit booking by 10%. Positive surprises in the earnings or other major news may obviously help it regain momentum. The key to success will be reduction in debt and improvement in margins. All this appears difficult at this stage, but it is not impossible.
The stock has corrected by more than 10% from its 52 week high made last month. The correction in the markets added momentum to the fall, and the volumes were much higher yesterday. Despite the correction, the stock is up nearly 27% on a 52 week basis, and has done well for the investors over the years. In fact, it has doubled over the last two years. The financial performance has been good over the past few years. On a yoy basis, the growth in revenue and net income has been good during the last few quarters. However, there has been some slowing down on a sequential basis. Recently, Comcast has increased interest in segments like fantasy sports by investment in fanduel.com through its venture capital arm. It had invested $11 million in fanduel.com. Fantasy sports is a fast growing business with companies like Yahoo (YHOO) and MGT Capital Investments (MGT) increasing their presence. MGT, one of the only small listed companies with direct exposure, has a special focus on the daily version of the sports, whereas most other players are presently concentrating on the longer / the full season version. The long term prospects of these new segments is good. Fundamentally, Comacast remains reasonably valued with a forward P/E of 14, and the PEG of 0.9 indicating good prospects of growth in the near term. It is trading at 1.6 times sales and 2.1 times book value. The debt on books is, however, a little high (~$47 billion). Average dividend yield of 1.7% is another reason to own the stock. This is one of those reasonable growth, decent capital appreciation stories, which still hold promise. The key to success is new products / offerings and exploring new segments of the business which have good growth prospects. Improvement in margins will also strengthen the fundamentals.
The stock has done well over the last one year with a 18% rise on a 52 week basis. Despite a 12% correction from the high made recently, it is still up 43% from its 52 week low made in November. Though the revenue growth has not been exceptional and the net income fell last year, the company has been able to report net profits during the last two years. This improvement in fundamentals over the past few years has helped the stock rise substantially. This rise has begun to stretch the fundamentals as the ttm P/E is now around 27 and the forward P/E for 2014 is just below 20. The PEG is also 2.54, which indicates moderate expectations on growth front. Performance in the last quarter also showed decline in net income on a yoy basis, though there was a 8.4% growth in revenues. The price to sales and price to book remain reasonable at 1.4 and 1.79 respectively. However, increase in debt over the past few years is a matter of worry for the company. The volumes over the last few days have been high, which indicate that there is some momentum on the downside. A deeper correction in the market may also put downward pressure on the stock. It is precariously poised around crucial levels, and a bounce is required to regain some strength. Negative news related to the patent infringement lawsuit filed by MGT Capital Investments (MGT) could also put pressure on the stock. Some news is expected on this front shortly. Many analysts are confident about the future of the gambling industry, and Penn may benefit from the growth over the next few years. The costs have to be controlled and the margins have to be improved continuously. In absence of focus on this front, the company may not be able to sustain the growth story.
Zacks has confirmed a neutral rating for the stock with a PT of $10. Analysts at Deutsche Bank have increased the PT from $7 to $9 and have a positive rating on the stock. RBC Capital also increased their price target on shares of Boston Scientific from $8.00 to $11.00 a few weeks ago with an outperform rating. Several analysts have hold or buy rating with the average target of around $8.4. The expectations are for an earnings per share of $0.41 for 2013. This indicates that the company is expected to be net positive in 2013. The stock has anyway done well for the investors in the past one year, and factored a lot of the expected turnaround. This indicates that while the rise has been good so far, it may become a little difficult to keep the stock growth going. It has doubled from the low in July and is making yearly highs. This is despite a not so great looking performance on the fundamental front. Over the longer term, things have been bad for the investors. Goodwill impairments etc. have put the stock under pressure. Revenues have shown a decline and the gross profits have also fallen. The net income has been erratic, and mostly negative due to the write-offs of goodwill. The debt on books is also high at $4.25 billion, and cash on books is around $268 million. The company has remained in news for results related to trials of its products, and there may be good progress on the innovation front. Even smaller medical device companies like PLC Systems (PLCSF), have built an IPR portfolio around the technologies they possess. PLC has obtained several patents for its product RenalGuard recently. For Boston Scientific, the possibilities on innovation may be the main reason for cautious optimism.
The stock is now trading above the consensus price target of $106 given by the analysts. JP Morgan has a target of $116 which is not far away. Historic highs of around $113 have been touched again recently. It is up nearly 18% from its yearly low made in July. So it seems that the stock has done okay over the past few months and years. However, the fundamentals have not improved and the revenues and net income have fallen over the last few quarters. Even in Q1'13, the gross profit and net income fell on a yoy basis. The revenues showed a marginal growth of 1.6%. Earnings are likely to be $6.26 for the fiscal 2013, which implies modest growth. The stock is trading at around 20 times ttm earnings and the forward P/E multiple is around 14.5. Again, this implies that the growth is not likely to be too robust in the next couple of years. Declining margins make the price to sales ratio of 3 appear a little high. Even the leverage is not so comfortable with $1.4 billion debt. All this indicates that the growth in the stock from here on will stretch the valuations, unless the fundamentals show improvement. Growth in the medical devices companies is primarily based on the new products which they are able to bring to the market from time to time. Even for existing products it is important to innovate continuously. Building a patent portfolio around the proprietary technologies created by the company is equally important. Even a smaller company in the sector PLC Systems (PLCSF) which owns RenalGuard (a medical device for prevention of contrast induced neuropathy), has obtained numerous patents around its single product. For BCR, though Europe and Japan may be important markets, emerging markets are also important for supporting future growth.
The daily fantasy sports segment has got a lot of potential for the long term future of companies like MGT. There was a specific article on the seekingalpha recently which highlighted the potential of the segment. Companies like Fanduel and DraftKings have already attracted investment from Comcast Corporation (CMCSA) and IACI (online media conglomerate). Atlas Partners has predicted that the market may rise 20 times by 2020 with the fees reaching $2 billion ($100 million at present). Fanduel, which was launched in 2009 is expected to pay $100 million in prize money in 2013. DraftKing is the top provider of mobile apps in daily fantasy sports, and expects to pay $20 million in prize money just for the MLB season. Even in the skill-based gaming, MGT is attempting to make an impact by a beta launch of a mobile gaming platform by the end of the current year. It is one of the main companies which is going to be directly impacted by the success or failure of the daily sports or skill-based wagering business. The company has strengthened its management team recently with hiring of Michael Haller and Mike Levy for the skill-based gaming and the daily fantasy sports businesses. The main task for these would be to quickly build these business so that it becomes a force to reckon with. The key would be building a good website, and marketing it well to attract more traffic. The other players will also increasingly get active in the daily version so speed of the strategic moves by MGT is also crucial. The prospects for growth of users and the revenues is good, and companies involved in the initial stages will surely be at an advantage to leverage the benefits. Going by the reputation of the newly hired management for the segments, things appear positive. But they need to deliver efficiently and fast.
I think you are right. This has huge potential..
The stock continues to struggle around $3 levels and is unable to make a decisive move. News flow pulls and pushes it around, and the net result is not significant. The potential in these lawsuits is tremendous, but the legal process does take time. Expansion of its enforcement against ZTE in Australia indicates that the management is definitely confident about the strength of its claims. That is a definite positive. It already has filed lawsuits against ZTE in UK and Europe. Vringo is seeking a declaration that ZTE Australia has infringed its patents, and wants a restraining order for stopping it to sell the relevant products without its authority. As per ZTE's public filings, the company generates its revenue primarily from the sale of telecommunications equipment and handsets. As per the SA article a few days back, ZTE has already settled with Ericsson in another case for $647 million. The article goes on to calculate the potential of the lawsuit in numbers and arrives at a figure of $600 to $800 million in licensing fees. Based on all this, the valuation for the stock was given at $5 and higher. These figures may or may not be correct, but it is sure that it is very difficult to accurately predict the time within which the benefits will accrue to Vringo. The fastest way for getting the resultant in the bank account is through settlements. The legal process, appeals etc. does take time, and the final result may take years. Still, the stock will continue to get excited with news flow. Vringo has been an example of sorts for other smaller companies which are pursuing patent monetizing strategies. While some companies like PLC Systems (PLCSF), a medical device company, is building a strong portfolio around its proprietary technology, other companies are taking the legal route to enforce infringement claims. Hopefully, things will become clearer for Vringo.
The stock has become a little quiet after a period of excitement. The discovery of more gold in its properties started the excitement and the volumes jumped. Further, the sale of Valor Gold stake did indicate that the management is attempting to meet the promise of starting production in 2014. Both these things put together increased the optimism about the potential value of the company. However, the big blast will come when it is able to find a strategic investor. That will ensure that the production can start on time, and the investors will surely get more confident about the future of the company. Coeur D'Alene is definitely a likely candidate for that as it already has a stake in the company. It had hinted at some acquisitions (not necessarily Pershing) in one of its presentations and wants to own more assets surrounding its properties in Nevada. The partnership could be mutually beneficial for both the companies, but nothing specific has emerged so far. The management's expectations of 50K ounces of gold production in the first year also indicates the potential of the operations. For a company of the size of Pershing (market cap of ~$110 million) it is a game changing event. In fact, for all development stage companies, this transition, from a development company to a producing company, does lead to tremendous change in valuations. It totally changes how the company is perceived and funding for future operations becomes a lot easier. The cash flow strengthens the balance sheet. The profitability of the operations will obviously depend on how the gold / silver prices are at that time. The overall sentiments in the gold / silver sector remain negative, but there has been some stabilization in the prices. Improvement in the overall sentiments will surely help matters and make things easier. Finding an investor is the key.
The stock has been strong after the launch of Nicotinamide Riboside (NR). In fact, it has been strong since quite some time and is up 33% in last 7-8 weeks. Even on a 52 week basis it is up by around 29%. Importantly, it has been able to commercially produce NR, and if the product succeeds, things will definitely change for the better. The benefits of the ingredient are expected in several indications. Weight loss is one benefit which is attracting a lot of attention. Weight Management Market (Diets, Services, and Fitness and Surgical Equipment) is presently valued at around $265 billion, and it is expected to grow to around 361 billion in 4 years. North America is the Largest Market for weight management, but Asia records higher growth as the market is relatively less mature. The supplements market in US is also expected to grow to $15.5 billion in 2017. These statistics indicate the potential for the product. The key obviously remains that the product should be able to deliver on the promises. Human clinical trials for NR may begin soon, and the results can give an indication of how efficacious the product can be. If the results support the claims in indications including diabetes management, then even other companies may get interested in the product. The numerous patents owned by Chromadex for NR will definitely help it if that happens. There are significant barriers to entry created by the company, and that will increase the monetizing potential. Some may like to include it as an ingredient in their weight management programs. The management is very excited about the product, and investors would definitely like to understand the financial potential of the product. That may not be that easy to tell because it is a new product, but surely the management can provide some information about its expectations.