November 9, 2018 8:27am
Quarterly reporting “spin” harms shareholder value
How damaging are Q3 LPS (loss-per-share) releases? Some companies are placed in post reporting purgatory
Pre-open indications: 4 BUYs and 1 SELL
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U.S. stock index futures are sliding triple digits
Dow futures are DOWN -0.44% (-115 points) and NASDAQ futures are DOWN -0.75% (-54 points)
U.S. stock futures pointed to a negative open on Friday as investors digested the latest comments from the FED.
European equities moved lower on Friday morning as they continued to track global market sentiment.
Asia markets were generally lower after Fed keeps rates unchanged while Hong Kong falls more than 2%
Data docket: the Bureau of Labor Statistics releases its producer price index (PPI) at 8:30 a.m. ET, while consumer sentiment and wholesale trade data are expected to be released at 10 a.m. ET.
- The iShares Nasdaq Biotechnology (IBB) is indicating a POSITIVE +0.08% UPSIDE in Friday’s pre-market;
- The SPDR S&P Biotech ETF (XBI) is indicating a NEGATIVE -0.55% DOWNSIDE in Friday’s pre-market;
- The Health Care Select Sector SPDR ETF (XLV) is indicating a NEGATIVE -0.29% DOWNSIDE in Friday’s pre-open;
- The iShares Russell 2000 (IWM) is indicating a NEGATIVE -0.57% DOWNSIDE in Friday’s pre-open
It’s been another unstable week with so many quarterly reports of LPS (loss-per-share) but, I have seen 2 net incomes <BioLife Solutions (BLFS) and Applied Genetic Technologies (AGTC)> this week!
Traders are also keeping an eye on the U.S. political situation, after midterm elections on Tuesday saw Democrats regain control of the House of Representatives for the first time since 2010, while Republicans made gains in the Senate. And NOW, the recounts and law suits will follow in a few states.
From Thursday’s night’s newsletter: “snap, crackle or pop, reporting not investing moves share pricing.”
“The iShares NASDAQ Biotechnology (IBB) in a week’s history lesson; a five session aggregate of a positive +1.87% after 2 downside sessions out of 5!
- In 6 session in November – there was 3 positive closes and 3 negative session;
- In 23 sessions in October – there were 17 negative closes and 6 positive sessions;
- In 19 sessions in September – there were 10 negative closes and 9 positive sessions;
- In 21 August sessions – 6 had negative and 15 had positive closes
- Review the range of the 19 upside from +0.35% (FIXX) to +24.53% (AST +$0.26) while the 26 downside ranged from -0.24% (KOOL -$0.0007) to -41.16% (MDXG) with 1 flat closes (RENE.L).
Decreasing volume stat:
- 7 out of 19 of the upside had higher (than the 3 month average) volume
- 10 out of the 26 downside experienced greater volume (than the 3 month average).
Companies in my headlights – It’s your decision; I provide an idea and context:
Applied Genetic Technologies (AGTC) reported earnings of $1.2 M or $0.07 per share, compared to a net loss of $1.4 m for Q3/17 beating estimate of a loss of $0.50 per share, compared to loss of $0.08 per share a year ago. These figures were adjusted for non-recurring items. This “Q” represents an earnings surprise of 114%. Cash position amounted to $105.4; thus a “runway” until 2020 – BUY;
BioLife Solutions (BLFS) closed up +$0.16 to $12.28 before reporting net income was $1.2 M, or $0.05 per diluted share, compared with a net loss attributable to common stockholders of $425 K, or $0.03 diluted per share, for Q3/15. Cash provided by operations for Q3 was $809 K, compared with cash provided by operations of $74 K for the prior-year period. Cash balance was $32.4 M compared with $2.8 M at 9/30/17 and $6.7 million at 12/31/17. Net income for the nine months was $2.1 M, or $0.10 per diluted share, compared with a net loss attributable to common stockholders of $2.1 million, or $0.16 per diluted share, for the 9 month period in 2017 – BUY;
CRISPER Therapeutics (CRSP) closed down -1.15 to $37.70 after Wednesday’s +$3.79 or +10.81% to $38.85 and has a positive +$0.40 or +1.03% aftermarket indication after reporting Q3 (a net loss of $50.7 M or -$1.07 per share) and enrollment for a P1/2 trial of CTX001 for β-thalassemia is currently open at multiple clinical trial sites in Europe, and the first patient has been enrolled in the trial. $487.3 M in cash extends a lot of “runway” – Maintaining BUY;
Verastem (VSTM) closed down -$0.13 to $5.72 after Wednesday’s +$0.76 or +14.93% to $5.85 and has a positive +$0.76 or +12.99% aftermarket indication after reporting Q3 (a net loss of $21.7 M or -$0.29 per share) and $145 M of cash; which “beat” expectations of an estimate of -$0.72 and revenue of $14.5 M versus estimate of $6.6 M – BUY;
Vericel VCEL) closed down -$0.49 to $16.60 after Wednesday’s +$0.44 or +2.64% to $17.09 with 2.8 M shares traded <3 month average = 1 M shares> after Tuesday’s $16.65 after a blow-out revenue “Q” and Monday’s $11.54. There is a $5.55 or +33% premium – lighten the load – SELL;
Opinions expressed are those of the author and are subject to change, and not intended to be a forecast of future events, a guarantee of future results, nor investment advice.
Whether information or intelligence is good, bad or somewhere in between; I put into context what is relevant and useful for investors. All investments are subject to risks. Investors should consider investment objectives.
Henry McCusker, the editor and publisher of RegMed Investors does not hold or have positions in securities referred to in this publication.