Buzz Stock of the Day – Hemispherx Biopharma (HEB)

Posted on Monday, April 27th, 2009

Shares of niche makers of antiviral products were up on Monday following news that we could be facing a global pandemic of the swine flu virus.

Our Buzz Stock of the Day — Hemispherx Biopharma, Inc. (AMEX: HEB) — was up more than 43 percent at 2:15 p.m. EST.

The Philadelphia-based company’s flagship products include Alferon N Injection(r) (FDA approved for a category of sexually transmitted diseases) and the experimental therapeutics, Ampligen(r) and Oragens.

Hemispherx just announced that it received notice of an Annual Report prepared by a director of the National Institute of Infectious Diseases (NIID) to the governing organization of the Japanese Ministry of Health that reported a series of successful preclinical studies in new pandemic vaccines that rely critically on Ampligen, the company’s experimental RNA nucleic acid being developed for globally important immune system disorders.

Hemispherx’s Japanese partner, Biken Corp., recently completed a series of preclinical tests on Ampligen that were necessary to complete a new product registration in Japan.

The Company also recently completed enrollment of a Phase II flu prevention clinic study in Australia.

Shares of HEB are up about 100% over the past 3 months.


Buzz Stock of the Day – Abraxis Bioscience, Inc. (ABII)

Posted on Tuesday, April 21st, 2009

Cancer treatment developer Abraxis Bioscience, Inc. (Nasdaq: ABII) announced a $100 million share repurchase program on Monday– a clear sign that management believes the company’s shares are undervalued at current levels. The repurchase of shares will be funded by internal cash resources and made through open market purchases.

“We believe our shares are undervalued and that our strong financial position makes the purchase of our own shares a sound investment at this time,” said Abraxis’ chairman and CEO, Dr. Patrick Shoon-Shiong.

The Los Angeles-based company reported revenue of $345 million in 2008, up from $334 million in the prior year. Gross profit for the year was $306 million, compared with $299 million in 2007.

But the real story at Abraxis, is ABRAXANE, the company’s tumor-targeting cancer treatment that use a protein called albumin to deliver chemotherapy, and does not contain chemical solvents. This eliminates the need for pre-medication with steroids or antihistamines, and significantly reduces the amount of time it takes to administer the treatment.

Last year was a busy year for Abraxis. When the company began “2008, we were commercializing ABRAXANE in the United States and Canada and approval to do so in India,” said Dr. Shoon-Shiong. “By the end of the year, we had commercialization approval in 36 countries.”

The company has also stepped up its marketing efforts in China, and is pushing ahead with the commercialization of ABRAXANE in Japan and Russia.

The company has to restructure its sales force after it ended its two-year, co-promotion agreement for ABRAXANE with Astra Zeneca. However, in an earnings call, Dr. Shoon-Shiong stated that the company could start seeing the benefits of its restructuring in the second half of the year.

Abraxis’ EU sales force in the European Union is provided by Innovex, a unit of QuintilesTransnational Corp. The company currently has five sales representatives in the UK, eight in Germany and expects to add eight in Italy this year and an additional sales force in Spain.

ABRAXANE was launched in the UK in December 2008, and the company plans to “continue this roll-out to additional nations in Europe on a country-by-country basis,” said Dr. Shoon-Shiong.

Abraxis is in good shape financially. As of December 31, 2008, the company had $607 million in cash and no long-term debt.

“I think the second half of 2009 would be a very exciting time for us,” said Dr. Shoon-Shiong.


Buzz Stock of the Day – Providence Service Corp. (PRSC)

Posted on Monday, April 20th, 2009

The Providence Service Corp. (Nasdaq: PRSC) stated today that it expects first quarter earnings per share of at least $0.35, a dime higher than the First Call consensus of $0.25. The social services management company stated it expects revenue or between $180 million and $185 million, higher than the $179.7 million analyst consensus.

Earlier this month, the Tuscon-based company announced that its Logisticare subsidiary won a $300 million contract from the New Jersey Department of Human Services to provide non-emergency transportation services for the fee-for-service in selected counties in New Jersey. The contract is expected to take effect on July 1, 2009, and has an initial term of three years with two, one-year renewal options that run through 2014.

Shortly before the contract was announced, SunTrust Robinson Humphrey analyst, Mark Hughes upgraded his rating on the stock to ‘buy,’ from ‘neutral. Hughes has a $12.00 price target on PRSC.

We like PRSC because the company generates cash from operations, has a small float and has year-over-year revenue growth of about 80 percent. The Providence Service Corp.’s 2008 revenue increased 143 percent to $691.7 million from $285.2 million a year earlier. Excluding a $169.9 million and an expense related to accelerated vesting, the company generated EBITDA of $39.1 million from $30.7 million a year earlier.

Shares of PRSC are up almost 500% since the onset of 2009.


Buzz Stock of the Day – DryShips, Inc. (DRYS)

Posted on Friday, April 17th, 2009


Greek dry bulk carrier, and our Buzz Stock of the Day — DryShips, Inc. (Nasdaq: DRYS) recently completed its at-the-market equity offering of $500 million, which should strengthen the company’s balance sheet and reduce its debt.

The company now has about 184.8 million common shares outstanding, and a market cap of slightly more than $1 billion.

CEO George Economou said in a statement that the “primary equity that we have raised has significantly improved our balance sheet and liquidity, and will enable us to continue reducing our debt obligations.”

Oppenheimer & Co. just upgraded DryShips to “outperform” from “perform” primarily because of the equity offering.

“We see upside potential based on the end of the company’s $500 million ATM offering, which removes consistent overhead supply that has been one of the causes of the stock price underperformance year-to-date,” analyst Scott Burk wrote in a note to clients. Oppenheimer established an $8 price target on DryShips, which has shed more than half its value since the end of January.

Earlier this week DryShips announced that its wholly owned subsidiary Ocean Rig ASA signed a three-year, $630 million contract with Petrobras for exploration drilling in the Black Sea.

The contract is for use of Ocean Rig’s semi-submersible rig, the Leiv Eiriksson, and is expected to commence in direct continuation from DryShips’ current contract with Royal Dutch Shell and includes about 60 days of mobilization, disassembly and reassembly of the derrick structure, and an incentive bonus of 8 percent.

DryShips’ stock has been hammered over the last 12-months, falling roughly 92 percent. The company has about $3 billion in debt, but generated about $540 million of operating cash flow in the trailing 12 month period.

Settling debt may take time, though. Although some analysts believe that the company will ultimately get teh waivers on loan covenants from its lenders, the process is slow-going, especially since DryShips has to negotiate with 20 to 25 banks, not just one or two, like many of the company’s competitors.

Jeffries analyst Doug Mavrinac said realistically banks are not going to want to foreclose on DryShips’ 40-lus vessels. The company, which has $1 billion of cash on hand, and should generate $1.7 billion in EBITDA over the next three years, should have it debt-free in that same time period.


Buzz Stock of the Day – China Sky One Medical (CSKI)

Posted on Thursday, April 16th, 2009

Business is booming for our buzz stock of the day, China Sky One Medical, Inc. (Nasdaq: CSKI).

The company, which manufactures over-the-counter drugs in China, reported record results for the fourth quarter and 12 months ended December 13, 2008.

Operating income for the year increased 91.6 percent to $35.7 million, and revenues increased 86.2 percent to $91.8 million.

The company started trading on the Nasdaq Global Market on September 16, 2008, and recently completed several key acquisitions, and recently received SFDA final approval for 19 drugs.

China Sky One expects full-year 2009 revenue to increase 40 percent to between $128 million and $130 million, and net profit margin to increase to $38 million to $39 million.

For the trailing 12 month period, China Sky One earned about $5.60 a share on revenue of $78.5 million. The company has about $51 million of cash, and generated $21 million of levered free cash flow.

We like CSKI because the company has continued to demonstrate growth in tough economic times, made some key acquisitions that could be accretive in the very near future, and has hefty 40.3 percent operating margins. The company also has a low P/E ration (8.58) compared to the industry average of 9.39.

“We are confident about the prospects for our business in 2009 and will continue to focus on increasing market share by both strengthening and further refining our successful sales and distribution network, building and enhancing our brand image, and making strategic acquisitions that continue to support our growth,” said Yan-Qing Liu, Chairman and CEO of China Sky One Medical, Inc.