Narrowly higher open but, a modest gain expected; RegMed sector, talking the talk of an analyst

April 26, 2016 6:59am

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Companies mentioned: ADRO, BLFS and MDXG

I say today what others won't, so you can do what others can't; whether information or intelligence is good, bad or somewhere in between – it defines the who, when, where, which and what of it …

Where are today’s markets going -  Dow futures are UP +0.13% and NASDAQ futures are UP +0.04%

A modest gain for U.S. stock futures on Tuesday is putting the market on track to rebound somewhat after dropping in two of the past three sessions.

European stocks extended gains as markets await the outcomes of several central bank meetings this week.

Asia stocks finished mixed on Tuesday as investors took to the sidelines ahead of major central bank monetary policy decisions due later in the week.

Data docket: A March report on durable goods orders is slated to hit at 8:30 a.m. ET, with economists forecasting a 2% rise.  At 9 a.m. ET, a February figure for S&P/Case-Shiller’s home price index is expected. Then the Conference Board’s April reading for its consumer confidence index is due at 10 a.m. ET, with a reading of 95.8 anticipated.

The stem, cell and gene therapy regenerative medicine (SCGT&RM) sector closed NEGATIVE on Monday, POSITIVE on Friday and Thursday, NEUTRAL on Wednesday and NEGATIVE on last Tuesday.

The stem, cell and gene therapy regenerative medicine sector’s record after the last 5 days (of 43 covered companies):

• Monday closed NEGATIVE with 24 decliners, 17 advancers and 2 flats;
• Friday closed POSITIVE with 18 decliners, 20 advancers and 5 flats;
• Thursday closed POSITIVE with 16 decliners, 26 advancers and 1 flat;
• Wednesday closed NEUTRAL with 21 decliners, 21 advances and 1 flat;
• Last, Tuesday closed NEGATIVE with 33 decliners, 9 advancers and 1 flat;

A reminder from Monday’s closing post, “Most investors think science is about facts and are quite frustrated when they find out science is in large part about uncertainty.”

• An analyst role is about advocacy, to present a position supported by evidence but, this market is not rational!

There are times, I believe some data is unnecessary. Yet I am still unsettled when it comes to traditional equity analysis and valuation techniques – the discounted cash-flow domain.

• Analysts need to value equities as an on-going business rather than a collection of assets. Why is a stock’s value a product of some future performance measure?

I am a fan of measuring the direct and indirect market comparables and then blending them with a sum-of-the-parts equation to reach a valuation number,

• The issue is that most investors believe a stock’s price movement is caused by specific catalyst events as investors are often highly trend oriented.

Also many analysts – NOT this one,  rarely put a SELL recommendation on their covered equities.

The burden of proof and clarity lies with the writer … don’t bury the question I will … ALWAYS ask – WHAT’S GOING TO MOVE THIS STOCK?

You’ve made it to the office, turned on the monitor having just gotten your coffee and it hits you - what could be today’s trades?

Watch, wait and listen list:

• The iShares Nasdaq Biotechnology (IBB) closed Monday down -0.83% and is UP +0.16%  in Tuesday’s pre-market;

• The SPDR S&P Biotech ETF (XBI) closed on Monday down -0.45%  and is DOWN -0.28% in Tuesday’s  pre-market;

• NASDAQ Biotechnology (NBI) closed down -0.88%;

• The Health Care Select Sector SPDR ETF (XLV) closed Monday down -0.39% and is UP +0.03% in Tuesday’s pre-market ;

• The iShares Russell 2000 (IWM) closed down -0.71% on Monday and is UP +0.38% in Tuesday’s pre-market.

Welcome to the big casino!

Aduro Biotech (ADRO) traded up 8.84% or +$1.27 to $15.63 in Monday's trading session.

• From a technical perspective, ADRO ripped sharply higher on Monday right off its 50-day moving average of $14.04 a share with strong upside volume flows. This high-volume spike to the upside also managed to push this stock into breakout territory, since shares of Aduro BioTech manage to clear and close above some near-term overhead resistance at $15.06 a share. Market players should now look for a continuation move to the upside in the short-term if this stock manages to clear Monday's intraday high of $16.23 share with high volume. Traders should now look for long-biased trades in Aduro BioTech as long as it's trending above that breakout level of $15.06 a share or above its 50-day moving average of $14.04 a share and then once it sustains a move or close above Monday's intraday high of $16.23 a share with volume that hits near or above 384,138 shares. If that move gets underway soon, then this stock will set up to re-test or possibly take out its next major overhead resistance levels at $16.74 to $17.72, or even $18 to $19 a share <Roberto Pedrone>. To me, ADRO started April at $13.32 dropping to a low of $12.99 <4/12> during the month and has incrementally flipped up since the 4/13 – traders are eyeing the profit “vig” – SELL;

BioLife Solutions’ (BLFS) closed DOWN -$0.01 to $1.85 and has traded in a narrow range for the month so far.

•  Biologistex CCM, LLC, its joint venture of a leading developer, manufacturer and marketer of proprietary clinical grade cell and tissue hypothermic storage and cryopreservation freeze media and a related cloud hosted biologistics cold chain management app for smart shippers, and SAVSU Technologies, LLC, a leading designer and manufacturer of innovative high performance passive storage and transport containers for temperature sensitive biologics and pharmaceuticals, announced a partnership with MNX Global Logistics, a premier global provider of specialized, expedited transportation and logistics services, to offer enhanced cold chain logistics services to the biopharma, biobanking, and regenerative medicine markets via the biologistex SaaS app. I see the writing on the wall, BLFS is failing and seeking any partnership that could provide a vehicle of exit for the company – BUY;

MiMedx Group’s (MDXG) financial results/earningsmisses by $0.02; revs in-line; sees FY16 EPS and revs below consensus.  MDXG had closed down -$0.27 to $7.83 - SELL:

• Reports Q1 Adjusted EPS of $0.04 vs $0.06 Capital IQ consensus; revenues increased 31% YoY to $53.4 mln versus $53.4 mln consensus.
• Guidance: Full Year 2016 revenue forecasted to be in the range of $242.5-250 vs $256.8 mln consensus; Full Year 2016 Adjusted EPS estimated to be in the range of $0.30-0.32 vs $0.33 consensus

Opinions expressed are those of the author and are subject to change, and are 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.

Henry McCusker, the editor and publisher of RegMed Investors does not hold or have positions in securities referred to in this publication.