While I have a target EPS for 2013 of $6.79 (Q1 $1.29), the "in the bag" analysis is far easier, albeit a bit less than my estimate, though MUCH higher than consensus EPS estimate of $4.51 as follows:
1. Annualize (4X for those who want to know how) 2012's Q4 of $1.09 = $4.36 Baseline
2. Add (Using Merrill Lynch's 70 cent EPS increment) new Fed. reimb.= $ .80
3. A miniscule 10 cent EPS contribution from Biovectra = $ .10
Total EPS (and this assumes ZERO growth!!!) = $5.26 17% over consensus
(NOTE for #2...since Questcor was receiving ZERO NET dollars from Medicaid Reimbursement )
The implication from this simplest of analyses is that current Consensus Estimates would suggest that Questcor would actually have negative growth in 2013...Given that they just finished a year with over 100% growth and are just now bringing their 100 or so Nephrotic and Rheumatology field team reps on stream and into productivity (learning curves, sales cycles, etc.) one would have to be making a huge leap that Questcor earnings were going to shrink, and if anything should be looking at accelerated growth particularly in the second half of 2013. Even the most ruthless of short side analysts could not (HAS NOT) defend a NEGATIVE 17% growth for 2013 :-)
I have run a full set of numbers using most current earnings, conference call updates and the exact financial reporting structure for 2013 and very conservative growth estimates (versus current trend) to derive 2013 EPS estimate of $6.79 which has a forward P/E of 5.00 right now...Q1 est. is $1.29...and for what it's worth my published estimate for Q4 was off by $.006 (that's six tenths of 1 cent).
NOTE---THE ESTIMATES HAVE MADE NO ALLOWANCE FOR ADDITIONAL EARNINGS ACCRETIVE FROM FURTHER STOCK BUYBACKS!!!
I included ALL risk factors exactly as I see them...Aetna (old news, no material damage since they are covering case by case with documentation). Others following Aetna (evidence is ALL to the contrary). Investigation (it's JUST an investigation, LOCALIZED and 99% chance it will at worst be a slap on the wrist for an aggressive rep). Competition (many pieces written that it was a complete SHAM orchestrated by bears)...Risk, MINUTE at worst !!!
With all due respect to maxdad and others who have done their own work, I like that the consensus #'s are only "slowly" moving up. let us enjoy the lower volatility investment holding harmony. Imho, it doesn't matter what the "actual" eps for q1 or 2013 and beyond turns out to be - only that it continues to be moving up, and that it is still very cheap on an enterprise to cash flow basis. The stock will continue to move up as the sentiment on qcor has turned, and now people are starting to figure out the truth - that acthar is not dead on the reimbursement front. The idea that acthar can be applied to other new indications, including ALS and the continued growth of RA(DM/PM), I personally do not think that info is "in the stock price", yet. i still think the stock goes to $75-$100 as people figure it out - i'd just rather it goes up slowly rather than the wild 10-15% moves that bring in the daytraders and hedgies.
One note: I've not dissected max dad's model, but i think his "could be" model is aggressive(though not saying it won't happen). just saying that even the mgmt is trying "hard" to keep the estimates reasonable by reminding people that(esp given that they're still trying to buy back 6.3M shares in open mkt):
1) inventory boost end of dec
2) medicaid bump will not apply for entire march qtr(due to partial inventory of old)
3) MS is still a bit soft
4) op ex going up 50% yr/yr
Therefore, let's enjoy the lower eps #'s as they sit today (99 cents q1, and $4.32 for 2013)...and watch the #'s continue to drift upward :)
MHO, choose if you want to ignore my bottom up estimates of $6.79 for 2013 and $1.29...Aggressive or conservative matters not.
Just look at my post on why consensus of $4.51 is ridiculous...summarized as follows: Take Q4 $1.09 and keep it flat for all of 2013 (= $4.36) add in Merrill Lynch's (not mine any more) 70 cents from Fed. reimb. changes and a nickel to dime EPS from Biovectra and your at $5.11 to $5.16 using a ZERO GROWTH ESTIMATE after 150% growth year on year 2011 to 2012. Even with these ridiculous numbers and an equally ridiculous P/E of 10X you're still at $51 and change...BEFORE ONE REMOVES THE "RIDICULOUS" :-)
Nice post MaxD.
I've been through the filings several times looking for reasons not to accumulate since I am closing in on my max for any one stock--coming up with little.
In addition to the financial case, I like most of the clinical research and organizational moves being made by management, most notably the ramp in rheumatology sales force and the expanded research budget for both mechanism of action and new indication initiatives.
Sentiment: Strong Buy
Pharma, accumulation is a no brainer, just looking at entry points and also tiered orders in case of a Citron attack. I think Citron has left the building, although, I would not put it pass him to find one small Health company's policy bulletin that he can mislead investors here. I believe the support levels below us are at 32.50 and 31.50 then $30. Above the resistance stands at 33, 33.80 $34, $34.80, $35 and then nothing holding us until $40. Even with a citron article, I do not believe we will ever see anything below $30 again. I think that Mikey was right in a previous post. he stated that we would not see a reduction in shorts until we get to the 40s. What I believe he meant was that short interest will greatly decline at that point, because they will finally get the impression that QCOR no longer has short potential.
Sentiment: Strong Buy