Biotech stocks have been the place to be over the past year and the space got even hotter yesterday. There is talk of more takeovers with potential targets including Amgen (AMGN) and Genentech (DNA) as well as several others like GILD, CEPH, BIIB look compelling, too.
The reason for all the consolidation was highlighted yesterday when news was released on Avastin and Tarceva. Apparently when taken together the combination extends the life of patients with advanced lung cancer while putting the disease at bay for some time. The news sent shares of OSI Pharmaceutical (OSIP) through the roof as the maker of Tarceva it is estimated this could mean at least $200 million a year in additional revenue. The stock has been ranged bound for a while and has room to the gap at $42.
I was really impressed with tech stocks yesterday and after the bell SanDisk (SNDK) posted its quarterly results that saw it generate revenue of $864.0 million versus the consensus of $767.0 million -- the good part stops there, however. The company lost $1.65 the street thought it would lose $0.60. Still, the initial reaction was the stock edging slightly higher. The conference call was a massive disappointment.
1Q09 guidance $475 million to $575 million; the Street was looking for $631.7 million…ouch!The company my offer stock that dilutes total equity by 20%Cap ex spending for FY09 will be $500 million down from $1.6 billion in 2008I must say its amazing this company's management had the gall to turn down $5.85 billion from Samsung. The stock closed with a market cap of $2.55 billion yesterday and was looking down 16% in the aftermarket.
Rewarding Resolve and Letting the Week Fall
In the past it was always about the strong getting stronger and we’ve all felt that was wrong or unfair. Ironically, in nature the system seems to work as the strong feeds off the weak but the smallest species in the animal kingdom like bacteria and viruses could bring down the mightiest of beast.
Yet here we are in the new man-made environment where the weak are expected to save the strong so that somehow the strong will serve the weak. It’s complicated to be sure and unnatural in so many respects. The unfortunate situation is we are now tying to keep the strong alive even as their place in the food chain may have run its course.
In the meantime, the weak ones that got stronger are going to be pushed back into a position of weakness. I simply think there are fundamental mistakes in the course of action being discussed. Yet, I agree something has to be done, although that something could mean moving out of the way and letting the [once] mighty fall.
Speaking of being blessed for having their own, Aflac (AFL) posted earnings ex items that missed the Street by $0.02 on the bottom line and $302 million on the top line but the share price moved higher in the after market because of comments from management. FY09 guidance is $4.51 to $5.59, and the Street is looking for $4.69 but if the yen remains strong the company could earn as much as $4.96.
But the really big news the company’s risk-based capital ratio exceeds 450% and the company says right now it looks like they don’t have to raise additional funds to make it through the 2009 malaise. That means this is a company that will use its position and survival skills to stay in the game and not be propped up by the government (ours of Japan’s) which is the way things are suppose to be in nature. God bless the child that got his own and investors bless the company that doesn’t need a government bailout.
Other insurance stocks were firm during and after the close if this industry escapes without the need for government money it could be a real leadership group for the broad market.
Hartford (HIG) is the one to really watch as it was the elephant in the room when a big time U.S. legislator suggested a giant name in the space was on the verge of going out of business. The stock tumbled under $5.00 a share late last year but has been clawing its way higher. Yesterday it was featured in Barron’s online in a positive light.
Another key name to watch is Met Life (MET) which has been in and out of the rumor mil for a long time with respect to biting the bullet. Of course, Ground Zero in the insurance space is American International Group (AIG) which sold a ton of insurance never intending on paying the policies which is a real sin and yet the company has an insatiable appetite for taxpayer money and for some reason they keep getting the funds.
I know counterparty risk is such the entire house of cards will collapse or so they say. In nature when the mighty fall it provides sustenance for the smaller players in the ecosphere.
Large banks take beating on Wall Street
Charles Payne: 3 Stocks, Charles’ Choice
