Dan'l- I don't think earnings expectations are that meaningful with VVUS. The company just put out its product a few months ago, and they may be investing heavily in expansion, so these "estimates" are just a nice way to put the analysts' "guesses." When you take a company like IBM or INTC, that has achieved more consistent earnings and growth over the last couple years, these expectations have much more meaning. I doubt VVUS will fall just because it missed the estimates of a mere two analysts, just as it didn't soar when it blew away all estimates last quarter.
The EPS this quarter will rest heavily on how much of the expense for building new facilities will be taken this quarter. If its a lot, then the earnings for this quarter will be lowered, while the earnings for the following quarter will be raised...no real change in the fundamentals of the company. The way I see it, if there's no milestone millions this quarter, the EPS should be down to $.12 from last quarter's $.27 right off the top. The wild cards would then be:
1. How much have operating and manufacturing expenses declined given that this quarter MUSE production was already in motion?
2. Did the FDA problems cause any slowdown in production?
3. How much will increasing future production capacity add to this quarter's expenses?
I doubt Vivus would allow #3 to be so big that we see a loss this quarter. Vivus just had 200 million shares authorized, so the company probably has an interest in making an acquisiton, and would not want the stock price to drop by reporting a loss. Likewise, I wouldn't be surprised by a single-digit EPS. The revenues number would be much more telling than EPS, but even that shouldn't be used conclusively because demand supposedly is exceeding supply, and revenues could shoot up as soon as more production facilities are erected. I see no slowdown in demand as long as there are no real competing products on the market. |
