Stephen,
Don't think there's any mystery as to what spooked some big boys on QLTI. The projected revenues for Visudyne are the subject of some controversy. Once the effects of having the reimbursement issue settled kick in, the revenue trend and quality of earnings should be more visible. Until then, given that we could be in a bear market still, shorting on uncertainty of the above is a valid idea. This flatline act it's been doing is also interesting, implying a violent break out at next news. I wouldn't enter now, unless using a tight stop, but wait for such event to start a trend, and if it is an upward one, go short when it has overshot.
The stock has "overreacted" to the fairly small revision in revenue a month ago, but the question is, Was it fairly valued before then? As you reckon, probably not. The danger is that we have an intermediate term bottom for a month or two. Expecting any bad news during this period that is normally a good season for biotechs in general? Another caveat is that while they may not have many new products coming, they are expanding indications into some other good markets (such as dermatology). You factoring that?
Cheers, Tuck |
