Sepracor-Looks very promising Message Board

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Biotech / Medical : Sepracor-Looks very promising

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To: kenhott who wrote (9931)	1/31/2007 8:24:15 PM
From: Robohogs	Read Replies (3) of 10280

Thoughts/reactions to action: 1. This action should have been anticipated and I had posted concerns about guidance several times here BUT the magnitude of the EPS beat surprised me slightly (even though I knew how they can game Xop neb) and the late action on Tuesday pinning SEPR to the bottom of the recent range confused me a bit as SEPR almost always reverses trend out of earnings (i.e., bottom of range would imply move higher). I had posted here I thought the stock would move higher and then lower but when it breached 62.50 area early (before I began tracking and before I could trade a 8 EST), my view evolved as follows: Stock was near top of range early Stock will retrace back to 60 and may even go down a modest amount EPS beat is very large but all in at-risk Xop neb and costs Lunesta sales really came off with reduction in promotional expense Too late to do anything This is why stocks are so hard - I had a view, it was generally correct, but the price action froze me. And since I do not have trading authority for naked calls, my covered call position froze me from selling my reduced shares or shorting (which I generally do not do anyway). I ended up with modest losses on a day when I should have made reasonable money. 2. Stock sold off as hard as it did for following reasons: A. Too much retail ST money not understanding guidance vs. beating on EPS B. Too many confused by how weak guidance had to be based on mix of current sales vs. mgmt history of UPOD C. Reaction to "awful" Lunesta numbers and trends - must admit the 150 bps share loss in last 6 weeks of 2006 had me concerned (and all due to lower sales costs which means not too much room to cut costs) D. Did Lunesta Europe slip by 3-6 months? E. Lunesta sales vs scrips with inventory build make ZERO sense unless they are having to discount 20-30% for some sales - actually likely given disclosure in 10K that they have three ~15%+ customers making up like 60-65% of sales (forget actual numbers so going from memory - assuming US govt, and 2 managed drugs guys) F. Once stock broke recent range, technical types sold and sold and sold G. Combo of such a strong beat and weak guidance brought growth down to 40% from 70% estimates I have NO idea if we drift down to mid 50s or go back to test the breakdown at 60 - recent experience says UPODers tend to rally back a bit after they guide down. Jon PS I did not carry my usual trading short puts as I was worried about downside here and my long shares in my main account were all covered down to $58 ($60 strike sold with stock at $61.50 for $3.50) - I missed by $1-2 (oh well). I did have a modest loss in another LT account where it just sits. PPS My independent advice in private messages to some SIers and Yahooers was much more bearish than the actions I ultimately took showing that "falling in love" can hurt. Some of them would tell you I called the action fairly closely (as did my public posts here). In my defense, I did plan on trading around the position but the action froze me AND I was hedged for much of the move.

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