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Theratechnologies Inc. Message Board

  • be_careful_outdere be_careful_outdere Aug 12, 2003 3:16 PM Flag

    Channel stuffing?????????????

    Street Insight
    A Diabetic-Related Short Play

    8/12/03 02:32 PM EDT



    Bullish AMLN
    Bearish THER



    Troubling signs at THER.


    Last week I discussed my diabetic pharmaceutical long play, Amylin (AMLN) which has since panned out quite well. I promised to talk about a short play in that segment, so here it goes. I have shorted TheraSense (THER).
    There are several negative indicators at the company. According to The Diabetic Investor the recent strong quarter should be looked at with a cautious eye. There are several danger signs. First, the meter market is slowing. Second, THER revenues are increasing while market share is not. Apparently THER is offering wholesalers huge discounts to hold larger inventories. In fact, THER wholesale inventory may be as much as six months. This compares to no more than two months for its large competitors. Third, insiders are selling or have filed to sell shares. Last, JNJ and other competitors are likely to introduce new products which will likely take away shelf space.

    Bottom line: Channel Stuffing never works and I think management is sending a message with their insider activity.

    Long AMLN, Short THER

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    • Interesting report.

      I'll watch your predictions with interest. It should be noted that the leaders at LifeScan/JNJ dropped AMLN back in the late 90's.

      Does your source site it's sources? What information are they using to determin that the meter market is slowing and that the inventories for THER are inflated compared to its competitors?

      As for the insiders selling, there is an old saying that goes, "There are many reasons for selling, but very few for buying". Most folks would agree that taking a few chips off the table after spending 5-6 years getting a company started is reasonable and not necessarily an indicator that the sky is falling.

 

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