Dan, My pick is a Biotech, Ligand Pharmaceuticals (LGND), so of course it
has no earnings. They just did a secondary of just over 3 million
shares, so outstanding shares (28 million) are just barely above
your limit. However, Robertson Stephens just initiated coverage
with a BUY rec and they made projections through 2006. The growth
in revenue for each of the next 10 years is well above your 75%
requirement (184%, 132%, 114%, 123%, 149%, 170%, 134%, 123%,159%,
209%, 201%, and 139%). LGND isn't expected to turn a profit until
2000 ($0.10). However, EPS is projected to grow rather dramatically,
to $14.55 in 2006.
LGND is a company that uses a broad panel of receptors to screen
hormones or analogs. One technology targets non-polypeptide hormones
(sex steroids, retinoids, glucocorticoids, etc) while the other
targets polypeptide hormones (interferons, interleukins, growth
factors). Existing markets for each technology are about $5 Billion
but they are growing as baby boomers age. LGND's technology is well
respected and sought after in the industry. They already have strategic
alliances with 7 major pharmaceuticals (PFE, GLX, AGN, ABT, AHP, SBH,
Sankyo) which represent over 20% of the industry. The latest
reseach report predicts "several" more in the next 1-2 years.
Biotechs in general, and LGND in particular, are prime candidates for
a January Effect. They boomed at the beginning of 1996 (rose to be the
#1 sector) and then drifted down through the year. As of yesterday, they
were just 1% above their Jan 1 levels. A couple of months ago I predicted
LGND would set an all time high in January, 1997 (>19 3/4). Last
year the price jumped from $8 to $13 1/2 in less than a month (beginning
Dec 20). I expected a re-run based on several pieces of news slated for
release in Dec and early Jan. LGND has already begun to move (from
11 1/4 to 14 3/8 since Nov 26), but it still has much further to go.
It has had three BUY recs in the past few weeks (Robertson-Stephens,
Hambrecht & Quist, and Raymond James). It was also mentioned in the
Barron's article on beaten down Biotechs. The current issue of Forbes
lists a couple dozen companies that will benefit from the January Effect
and LGND is one of two Biotechs listed.
However, the slated news has yet to come out. LGND will be looking
at interim data this month on two phase III pivotal trials (on oral and topical
use of Panretin and Targretin - Robby Stephens projects sales for these
two drugs to reach $500 million in 10 years). They will also begin
clinical trials on two more drugs (ALRT1550 and CP 366,156) this month.
LGND will also present at the Grand Ballroom of the H&Q Life Sciences
conference (300 presenting companies and 1000's of analysts and institutional
investors in attendance) on Jan 7 (I expect positive clinicals and
at least one strategic alliance announced).
Recently, volume has been heavy (averaging over 600,000 shares per
trading day in Dec) and the overhang from the secondary is gone.
Modest volume can now move the price (sellers have disappeared). Today
just before the close, a buying burst pushed the price to 14 3/8.
LGND has already broken out (gapped above 50 day and 200 day moving
averages on heavy volume). The technicians are salivating. They
should be ready to rock 'n roll at Monday's open.
Intraday charts can be seen at lombard.com
A year's worth of LGND press releases, as will as an electronic
version of their annual report, 10Ks, and 10Qs can be found at
prnewswire.com
I can answer virtually any question on LGND. Much information, as
well as the prediction BEFORE the move, can be found under Biotech
Boom? or Ligand (LGND) Breakout! in the Biotech section of this board.
Henry |
