Wayde,
You certainly put the best face on the situation, and since I own ASND shares I hope you're right. But there are some serious questions that suggest the stock price may drop further before it recovers:
1. You referred to the company's squeeze last quarter and assume it should be easier to make the 3Q numbers. But the weak July raises some doubts about the book-to-bill situation. Similarly, since August is typically an abysmal month, you are more likely looking toward a Herculean effort in September. Already the estimates were for September to carry about half the total 3Q sales.
2. The company announcement that sales were impacted by a 4-5 day sales conference may be a smokescreen. While it may have had some negative effect, the weak July under circumstances where you would expect they would at long last be shipping some of the pent up demand sales may be an indication of other problems. Given the company's very bullish pronouncements throughout July, it is harder to credit either their forecasts or their explanations.
3. Perhaps the selloff was overdone and those exiting were primarily short-term traders with weak hands. But that's hard to know. ASND has been buoyed by a tremendous loyalty among tech investors and institutions. Any crack in that trust could have serious negative impact. Particularly in an iffy market, it is hard to know when sentiment changes the perception of a stock from one people are looking for opportunities to buy to one where they are looking for opportunities to sell. If the market strengthens, it should help, but ASND may be one of the first stocks funds will jettison if the market weakens, because of the uncertainties.
4. You raise the possibility that favorable comments by Merrill or other analysts may give the stock a boost. But unfavorable comments may cause it to sink further. Which is more likely now? Since right now there is an enormous climate of doubt, I would suspect that there may be some additional bad news revisions coming from analysts before there is much good news.
5. Long term, I think things look great. The company looks positioned to do very well. I agree with Paul that the $64 question is whether ASND can grow at a 30-50% clip. My guess is their chances of doing that are very good. But the increased likelihood of a shortfall this quarter may dampen some of the optimism and increase some of the doubts. I'm afraid we may go lower before there is enough buying conviction to turn things. Since ASND has commanded a premium PE based on its consistent high growth performance, doubts about its continuance may produce some PE erosion around perceived lower earnings for the quarter.
Hoping you are right, but with increased fear and loathing after Monday.
Baird |
