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Biotech / Medical : Biotech Shorts
XOMA 32.98-0.7%Oct 31 9:30 AM EDT
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To: (no name provided) who wrote (15)1/25/1997 2:32:00 PM
From: Mark Nelson   of 61
 
Re: timing VVUS short
The strength of Friday's trading was based on the J&J deal for marketing (international: covers China, multiple Pacific
Rim countries (excluding Japan), Canada,
Mexico and South Africa. ). Monday, we will see pretty weak buying across the board because everyone is waiting to see how the ECI report comes out. It's going to move the market a lot if it's out of line with expectations. This is because the ECI is a report that Greenspan gives a lot of weight to.
11/18/96 Vivus Inc. (VVUS), Genesis Merchant Group analyst Wole Fayemi upgraded VVUS to "strong buy" from "buy" based on the recent decline in the price (the stock closed Friday at $30.25), and raised his price target to $60 from $55. He estimates $42.4 million in 1997 sales.
If VVUS were to have a 50% margin (a wild guess) they'd have profit of $21.2 million which gives them a P/E of 36.5. While this is not astronomical, for projected earnings it seems pretty high. It assumes 2.5 million doses sold. If their margin is less I would say the longs are much less than rational in their exhuberance.
As an aside, I would not carry any fully priced long positions overnight on Monday. In fact, I probably will hold only fully priced shorts overnight.
Later,
Mark
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