I think Friday's action was short covering but, not because anyone knows anything. Rather, it was because, the ITC final ruling is scheduled to issue tomorrow (probably after the close). Given the big gains shorts have, it was prudent for some of them to cover at least a part of their position. If the ITC decision goes against VISX (which, based on ITC data regarding reversals, is very likely) the shorts who covered will pile back in and VISX would likely make new lows.
That said, a negative ITC decision is not a tremendously substantive decision at this point for VISX. Logically, it shouldn't affect VISX further because it has already been more than discounted into the share price. Of course, that is irrelevant at a short term sentiment level.
Much more substantive will be:
1. How VISX pricing affects procedure demand;
2. The PTO reexam decision on the Trokel '388;
3. The status and ultimate disposition of the ND of Calif. infringement action;
4. The competitive response of BOL;
5. The response of BOL to a PTO decision, if favorable, on the matter of licensing; and
5. The potential M&A of BEAM.
Bottom line - None of these issues will be resolved tomorrow; most likely will not be resolved this month. So, if you are looking for a VISX recovery, hunker down,stay alert, and be prepared to turn on a dime (as long as it isn't VISX's stock price!). The industry is more fluid and dynamic than ever and there is an avalanche of negative sentiment limiting share price recovery. |
