In regard to the convertible debt, I think it is foregone that the debt will be converted into shares, but not before the due date. If you held the debt, wouldn't you want to receive the interest as long as possible before converting, since the price is fixed and you gain by waiting?
It makes sense to me to add 3.9mm shares to the outstanding in ones' calculations, assuming 36mm shares as a rough total, and $1.7B as a rough market cap. This puts Sepracor in the top ten biotechs, and at a reasonable valuation for a company with two approved products, with no revenue received yet for either of them. There is still huge upside, as the other products move forward and Levalbuterol and Allegra revs roll in.
With regard to the TA, I don't think it works here. The stock moved on news, and will range-trade until there is more news, or until biotechs catch fire. One needs to recognize that some shares are held for investment, and some shares are traded. If I'd bought at $40 several weeks ago, I might have sold the Levalbuterol news. But I bought in the teens, and the taxes would eat up a sale from here.
Stock is held by traders as well as investors, and some who range-trade around their long positions following the rising trend-line. A sell-off after a gain is to be expected, and doesn't matter at all in the long run. |
