Tag - Bcrx

Stocks closed up today in trading that dipped downward for most of the trading session only to crawl back up in the afternoon.

The Dow was up 68 points to close at 8,916; the Nasdaq inched up in late trade to post a 7 point gain and close at 1,916; and the S&P 500 close at 955, up just over 3 points.

Contrary to the major indices, the Russell 2000 closed down nearly 2 points to 525.

Small-cap gainers were lead by JDA Software Group (Nasdaq:JDAS) of Scottsdale, Arizona, up 34% today after the company's second quarter earnings beat Wall Street projections handily. JDA makes software that helps retailers manage their inventories and as those retailers have been looking to improve their bottom lines by minimizing stock in inventory they've turned to JDA for help. According to Thomson Reuters the street was looking for profits of 30 cents per share while the firm reported 47 cents per share.

Other small-cap gainers include BioCryst Pharmaceuticals (Nasdaq:BCRX) up 22%; and Akorn (Nasdaq:AKRX) up 17%.

Leading percentage decliners for the day include Headwaters (NYSE:HW) down 23%; CIT Group (NYSE:CIT) down 22%; and LexMark International (NYSE:LXK) down 20%.

*****Caterpillar (NYSE:CAT) is up huge this morning after it blew away analysts' earnings estimates for the 2nd quarter. Caterpillar is an important proxy for global growth because it sells so many machines overseas. So when it reports earnings of $0.72 a share when it's only expected to make $0.22, it seems like a big deal.  
The assumption is that global growth is helping Caterpillar. If only it were that simple. But Caterpillar missed expected revenues by nearly a billion dollars. Analysts wanted to see $8.7 billion in revenues, but they only got $7.9 billion.  

Caterpillar benefited from cost-cutting and a lower tax rate. Since December, it has cut 17,000 full-time jobs and axed another 17,000 in part-time and contract jobs.  
Caterpillar can be commended for cutting back its production to be in line with demand. But there clearly isn't any growth here. 

*****This is a common theme so far this earnings season. Companies are talking about stability, not growth. In other words, things aren't getting worse. But they aren't getting better, either.  

Companies are beating earnings expectations through cost-cutting, which is essentially a one-time event. And in the big picture, those cost-cutting moves help profits, but ultimately remove demand for goods and services because they are adding to unemployment.  

I don't think unemployment has peaked. I also think that we will see high unemployment persist for a few years. And that will mean a long wait for robust growth from the U.S. economy.  

And to complicate things, we can also expect more regulation and higher taxes to stifle growth. I'm calling this situation "Managed America." And investors need to be prepared for how to invest in Managed America.  

I just released my "Managed America" forecast for my Top Stocks Insights advisory service. It's part of my Predictions 2009 Update special report that was just released. In the report, I outline my strategy for investing in Managed America. Click here to get your copy. 

*****Here's some great news from the commercial real estate sector. Convenience store company 7-Eleven is opening 200 new stores this year. Why? Because it's getting leases at a 30% discount form just 6 months ago. And interestingly, it's moving into some of the hardest hit real estate markets - New York and California.  
Now, 200 stores won't turn the commercial real estate market around. But 7-Eleven's move illustrates how commercial real estate, and real estate in general, will recover.  

The first step is the painful part - leases and mortgages go into default and are written off. This is a complicated process as there is usually a trail of financial obligations based on the assumption that whoever leased or purchased the real estate will be paying.   

As we've seen, defaults and foreclosure have far-reaching effects. But once the losses are taken, the property can be leased or sold at a price that makes sense for a business. In other words, a company like 7-Eleven couldn't make money at rents from six months ago. But now that the price is down 30%, suddenly it makes good business sense for 7-Eleven to open stores and hire people.  

There's a lot more pain to go through before this process actually leads to a growing economy. But it will happen, eventually.  

Best Regards,

Ian Wyatt
Editor
SCI Daily

Stocks are in the red today after new data did little to bolster investors’ spirits that the economy is slowly getting better.

At 2:51 pm ET, the Russell 2000 (NYSE:IWM) is down 1.43%, while the Dow is down 1.10% and the S&P 500 is down 1.44%.

Today the Labor Department said consumer prices in April were flat, as economists predicted, while New York-area manufacturing activity and industrial production contracted less than economists expected. Investors remain cautious ahead of several reports out next week on housing.

Small caps bucking the decline today include BioCryst Pharmaceuticals (Nasdaq:BCRX), up 30% after reporting encouraging results from its Phase II lymphoma trial, and Fuqi International (Nasdaq:FUQI), 20% higher following strong first-quarter results.

******You know over the course of the past few months I’ve not held Wall Street or the banking executives in high regard. I hold them almost — that’s almost — singularly accountable for our current recession (Uncle Sam and private citizens who borrowed too much are to blame as well), but the government is beginning to really stick its nose too far. For example, today’s headlines (those not about whether Nancy Pelosi knew about torture and when she knew it) are consumed with government pushing itself on private industry, most notably with the pressure on Bank of America (NYSE:BAC) to change its board.

Granted, “regime change” is a necessity for most of the companies receiving TARP money. After all, they’re the ones who got us into this mess. But shouldn’t it be shareholders forcing the issue? You saw how they forced Ken Lewis of Bank of America to give up his role as chairman. This was done at the shareholder level, not by some bureaucrats in a windowless office overlooking the National Mall.

But for many Beltway insiders this isn’t enough. Someone’s got . . .

The Russell 2000 (NYSE: IWM) futures have moved up and the small-cap index will open in the green.

Investors are waiting to see what kind of relief President Bush will offer to borrowers at risk of losing their home. The plan will most likely feature a temporary hold on low mortgage rates that would otherwise increase sharply with time.

In economic news, the number of unemployment claims for the week ended Dec. 1 was 338,000, a decrease of 15,000 from the previous week’s upwardly revised figure of 353,000, according to the U.S. Labor Department. Economists were expecting to see a slightly larger decline.

Here are the biggest percentage gainers and losers in pre-market trading among companies with a market cap between $100 million and $750 million:

Biggest percentage gainers:

• Hoku Scientific, Inc. (HOKU), up 33% on news it will borrow up to $185 million for the construction of a polysilicon production plant.
• Pain Therapeutics, Inc. (PTIE), up 14% on news a drug trial met its endpoint.
• DURECT Corp. (DRRX), up 14% on news of a successful drug trial.

Biggest percentage losers:

• BioCryst Pharmaceuticals, Inc. (BCRX), down 10% on news it has decided to discontinue a drug trial.
• Advanta Corp. (ADVNB) down 4%.
• Force Protection, Inc. (FRPT) down 3% on news of an unfavorable article published about the company.

BioCryst Pharmaceuticals, Inc. (Nasdaq: BCRX), Spherion Corp. (NYSE: SFN) and Hudson Highland Group, Inc. (Nasdaq: HHGP) are among the biggest percentage losers in Thursday's trading among companies with market capitalizations under $500 million.

Here are today's biggest percentage losers:

Shares of BioCryst Pharmaceuticals (Nasdaq: BCRX) are plunging today after the biotechnology company reported after Wednesday’s close that its Phase II trial of peramivir for the treatment of the flu did not significantly improve flu ailments when compared with a placebo.

Caris & Company is downgrading the small-cap company to a rating of “average” from “above average” based on the negative Phase II results.

“We believe development risk has increased,” Caris & Company analyst Douglas Chow wrote in a research note today.

On account of the disappointing trial, Chow is lowering his target price to $9.50 from $13. He also lowered his estimated probability for success in BioCryst’s Phase III trial to 40% from 80%. The company intends to begin Phase III trials in the second half of this year.

While the company is suffering a setback from its worse than expected Phase II results, Cow says he thinks value creation still lies ahead.

“With clinical development of peramivir funded by a $102.6 million contract from the U.S. Department of Health and Human Services, and BCX-4208 funded by Roche, steady advancement of clinical programs and a moderate cash burn rate could create value for shareholders in the next 12 months,” Chow wrote.

Chow also noted that in the event of an actual pandemic today, BioCryst would be able to meet government needs.

Going forward, there could be a couple of catalysts for the stock. According to Chow, BioCryst could initiate a trial for Fodosine cutaneous T-cell lymphoma during the third quarter of 2007. In the fourth quarter, BioCryst plans to start the Phase III trial with peramivir in influenza. Also in the last quarter of the year, Chow said he expects BioCryst could announce additional clinical programs for Fodosine.

Shares of BioCryst (BCRX) plummeted $4.10, or 34.80%, to $7.68 in midday trading.

The subject of today’s column, BioCryst Pharmaceuticals, Inc. (Nasdaq: BCRX), comes with numerous caveats, not the least of which is that it has been a terrible performer over the past two years, falling from above $20 to single digits. Further, as a development stage biotech this is inherently a risky situation. The fact that is has yet to receive regulatory approval for its drugs adds further risk.

It also holds the inherent risk of being a small-cap stock, with a market capitalization of $235 million. And, it is working in a highly speculative area; the company is developing a drug, Peramivir, as a treatment for flu, as well as Fosodine, a treatment for leukemia.

BioCryst is often considered a “bird flu” play, as its Peramivir is being tested as a treatment for Avian influenza. As a result, the stock rose sharply through the second half of 2005, when media and investor attention were focused on the potential for a bird flu pandemic. It has fallen equally sharply since early 2006 as concerns over the Avian flu have abated.

The severe decline in the shares over the past year, however, has not deterred two leading biotechnology advisors who continue to see significant long-term potential. Both foresee continued development success with BioCryst’s Avian flu treatment. And both foresee additional potential in its pipeline.