(Click On Charts To Enlarge)
VPHM will report before the bell. Conference call at 9AM. Chart #1 takes us back to last summer when VPHM crashed. It has spent nine months in recovery, building a base below the Exhaustion Gap down from 10.22, on August 10, 2007.
In Chart #2, we can see that VPHM put in a Bullish Falling Wedge (pattern in blue) within the larger Ascending Triangle (pattern in green) in March, and broke out of it on April 1, putting a target of 11.34 IN PLAY. After the breakout, VPHM had trouble getting above 10.00. The April highs were 9.94-9.97, so if earnings are very good this morning, I would expect them to open the stock there, or better. The top of the Ascending Triangle is at 10.10. The highs of the pattern were 10.30 and 10.19, so those need to get taken out to the upside as well.
I like the way that VPHM responded to the April 16 bad news about HCV-796. Something like that often is enough to crash a stock, but instead, VPHM went down and successfully retested the Bullish Falling Wedge breakout, rallied and failed at the 200DMA, then successfully retested the Bullish Falling Wedge breakout again. That's a bullish sign when stocks respond well to bad news. VPHM has moved higher off that DOUBLE successful retest of the wedge into the release of earnings, indicating that it wants to go higher. The release of earnings is always a wild card. If VPHM doesn't disappoint, and if it can break out of the Ascending Triangle, that would put something above $13 IN PLAY.
2 comments:
Hi MelfElf,
thanks for your analysis.
What is your opinion about todays price action and the following news:
VPHM Discusses Q1 Earnings and Sees
Full-Year Sales Above Consensus
ViroPharma Inc. (VPHM) announced Wednesday that firstquarter
earnings fell to $17.4 million, or 22 cents a share, from $22.1 million, 31 cents, a year ago. Revenue increased to $50.9 million from $49.0 million. Analysts had expected EPS of 23 cents.
The President and CEO of Viropharma, Vincent J. Milano, stated in a conference call, “The
first quarter of 2008 represents our 13th consecutive quarter of profitability and positive cash
flows. We ended the quarter with $600 million in cash, and we continue to invest our cash
wisely and safely to withstand the current macro-economic environment.”
“We expect our very good start for 2008 to continue through the rest of the year. We are wellpositioned
to meet our full-year guidance of $210 million to $235 million in net sales.”
ViroPharma currently commercializes Vancocin(R), which is the only antibiotic approved to
treat two significant bacterial infections of the lower digestive tract. The product is administered
orally and is indicated for the treatment of enterocolitis caused by Staphylococcus aureus (including methicillin-resistant strains) and antibiotic-associated pseudomembranous colitis caused by Clostridium difficile.
The Company is also conducting research on non-toxigenic C. difficile (NTCD) with the goals
of preventing the recurrence of disease following effective therapy for acute C. difficile infection
(CDI) and preventing CDI in patients who are susceptible to colonization with toxigenic
strains due to prior use of antibiotics. ViroPharma is also researching next generation antiviral compounds intended to target hepatitis C.
Camvia(TM) (maribavir) is an orally-administered antiviral Phase 3 drug in development for
prevention of cytomegalovirus (CMV) disease in transplant patients. CMV is a member of the herpesvirus family and is found in body fluids, including urine, saliva, breast milk, blood, tears, semen, and vaginal fluids. Once CMV is in a person’s body, it stays there for life. CMV is the most frequent viral illness post transplant and is the most common cause of viral illness-related death in transplant patients. Prophylaxis (preventative treatment) against CMV disease
is currently underutilized due to toxicity of current treatments.
Mr. Milano added, “We look forward to a number of significant events throughout 2008, starting
in May with the completion of enrollment in our stem cell transplant study of maribavir. In
the coming months, we anticipate the publication of the IDSA/SHEA CDI treatment guidelines
which highlight the recommendation of Vancocin for treating patients with severe disease based upon compelling clinical trial data that demonstrated the superiority of Vancocin in this patient population.”
He concluded, “With our strong programs and balance sheet, we remain a very compelling investment option for biotech investors. We believe the work that we are doing today can provide opportunities for additional growth.”
&
from Zacks.com
ViroPharma a Deal Up to $14
Wednesday April 30, 10:27 pm ET
By Jason Napodano, CFA
ViroPharma Incorporated's (NasdaqGS: VPHM - News) stock has been in a sideways trend for the past several months. And, although we are maintaining our Buy rating on the stock, we continue to see little movement until an update is issued from the Office of Generic Drug (OGD) on a potential generic Vancocin product.
Management continues to petition the Food and Drug Administration (FDA) to delay a generic entrant, most recently submitting views on the in vitro dissolution bi-equivalence testing methods. Approval of a generic product at Strides/Akorn at any time could create volatility in the stock. However, at this level the stock remains incredibly cheap and we are optimistic that management will be able to add significant value in the coming years.
We are maintaining our Buy rating with a price target of $14. This is despite the fact that we expect little movement in the stock price until clarity on the generic Vancocin issue emerges.
We do not expect a generic product launch until 2009. If the FDA/OGD is silent until 2009 that could mean ViroPharma's stock will remain in the tight trading range throughout most of the year. At this time we are looking for the Camvia phase III data from the stem cell transplant (SCT) study in the first quarter 2009 as the best near-term catalyst outside of an update from the FDA/OGD.
ViroPharma exited the first quarter 2008 with $599 million in cash on hand. This is 94% of the current market value of only $640 million. The net cash position (minus $250 million in debt) is still over 50% of the stock value. Management is actively seeking opportunities to put this cash to work.
We are anxiously awaiting an announcement. That being said, ViroPharma is one of the best managed companies in biotech. We are very confident in the financial and strategic position of the company that is key to our recommendation.
At this level ViroPharma stock is too attractive to ignore. Our 2008 revenue forecast of $220.9 million yields a price to sales ratio of 2.9x. This is significantly below the biotechnology peer-group average of around 6.5x. We forecast 2008 EPS at $0.90 (including option expense). Our $14 price target is based on 15.5x our 2008 EPS estimate of $0.90.
Good Morning, Oliver,
It looks like VPHM disappointed by a penny, huh? I think The Street was expecting $0.23.
The selloff wasn't too bad. The stock is still above the Bullish Falling Wedge breakout, and well above the bottom of the BIG nine-month Ascending Triangle (the pattern in green).
"The bigger the base, the better the breakout," so if VPHM can stay within the pattern and eventually breakout, Zach's $14 target looks about right. I get a little less than that on the Ascending Triangle measurement. Low $13's, but stocks often go well beyond targets.
Good luck!
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