Comments to all:
Excellent comments in today's posts. I agree that at this time, (because of taxes) until January 1st, there is no reason for anyone to buy VVUS, whether they are short or long. However, in the market, there are always people who jump the gun. If I were short and trying to wait to buy in 1998, I'd be sweating bullets on this one. I agree, it is short covering that will start the Jauary rally for VVUS. And I anticipate it to come as soon as daylight Jan 2. Until then the stock may drop lower. But if ever a company was poised for the January effect.....
Let's look at one of the funny math things about a company that is just about to finish it's fourth quarter of real sales after being a money pit R&D company for so long. When you calculate one year trailing earnings, you have to include the 1996 4th quarter loss of (0.29) to come up with a current 12-month earnings of 0.57 per share. i.e nine month earnings of 0.86 to Sep 30, 1997 plus loss of (0.29) for Q4 1996 equals 0.57. If VVUS has eps of ZERO in the fourth quarter 1997, the twelve month trailing earnings will still rise to 0.86 just by eliminating the one quarter of negative earnings in the sum.
Well, product revenues did not disappear. They just went down 25%. And, don't forget, also included in the fourth quarter will be two milestone payments of 2 mm each which add 0.06 to earnings each. so my guess (I did the math in a post long ago) is that earnings will be 0.20 to 0.24 per share for Q4 which gives us a twelve month trailing eps of 1.06 to 1.10 or a P/E of about 9.2. In other words, VVUS can report the expected lower Q4 earnings and still cut it's p/e almost in half upon the announcement. This will then show up all of a sudden on a lot of simple stock screening programs as a real buy.
So meanwhile I'll hang tight and look for the story to unfold. I agree, the analysts were offended by the CC and this is now a show-me stock. I think it will do it, and do it in the next 30 days.
Zebra
P.S. About the demand: I am still getting new inquiries from established patients who have not brought this up before, partly from embarrassment but partly because they had never heard that there was an effective treatment with no needles, until the talk about Viagra started a month or two ago. You just cannot overestimate the fear factor of needles for many men. The demand will be there, VVUS just has to have the product. |
