NPSP certainly has been a momentum stock. I like the business model and competitive barriers. The stock is rolling over today, on high confirming volume, based in part on disappointing reaction to the CEO presentation at the influential Morgan Stanley Global Healthcare Investors conference September 9. .This selloff took place in the context of the recent insiders/directors selling, including the chief medical officer, of more than 3 million shares @ $ 23.21-$25.18. High 11% Short % of Float in NPSP is also a tell. 10% is frequently the threshold for concern.
The external environment over the next two weeks is perilous. Next week the Federal Reserve decides on tapering, the week after congress tackles the extension of US debt limits, and Syria remains a near term wild card.
Absent positive company catalysts, unlikely since NPSP just reported, NPSP could test 20 day SMA of $ 25.52 or the 50 day SMA support $ 21.21, before the end of September. I profitably sold my position in NPSP and look to re-enter at a better risk adjusted price in the low $ 21’s -mid $ 25 range. My thesis changes if the stock decisively reverses it’s 5%+ correction on high volume.
High Beta Biotech's as a group are rallying today. Some of the best performers, most of which are in my portfolio as stocks or options, include: PCYC + 4.9%, BIIB +4.55%, SRPT +3.9%, ACT +3.49%, RPRX +2.6%, CELG +2%, REGN +1.5%, +NPSP 1%, +GILD 1%.
The IBB ETF , encompassing many of these high flyers, is up 1%. The broader market is also having a good day +.4%.
NPSP Update.... In previous posts I suggested " Absent positive company catalysts, unlikely since NPSP just reported, NPSP could test 20 day SMA of $ 25.52" . The upgrade today from BofA, Wedbush, and Oppenheimer is indeed a positive catalyst! The stock responded favorably with a 4.16% bump. The key question is will this rise be be sustained by high confirming volume today, and continue for the next several trading days. These factors will be determinative.
We all know for the next several weeks the broader market has more headwinds than tailwinds. Resolution of the budget and more importantly the debt impasse is crucial to reversing this negative sentiment.
While these upgrades are meaningful, especially over the medium term, where I have been very positive on the prospects for NPSP, it will be difficult for any stock to fight S/T adverse market headwinds.
Some NPSP posts express the hope that NPSP is at the precipice of piercing the low $ 40’s. Hope is a very real and understandable human emotion, it is rarely an investable strategy.
Let’s look at some recent NPSP performance history, during periods of market turmoil. Late June, and subsequently the second week of September, NPSP, peak to trough, corrected 9% and 12% respectively. I can find no occasion when NPSP appreciated by 20% ( $ 40 target minus $ 33.39 October 2 ) close, without a company specific positive catalyst, in an uncertain news driven market. For the next several weeks continuing disquiet over the budget/debt crisis is likely, and positive catalysts, unless mandated by SEC disclosure rules, will probably be revealed in the early November earnings report and management call.
This is why I believe that a pullback to the mid $ 20’s, realized as recently as September is plausible, and a 9%-12% or greater correction is likely, depending on the magnitude and duration of budget/debt issue.
Fact based alternative perspectives are welcome
NPSP is down .75% this morning, closely tracking the S&P .85% decline. Stock has traded in a tight range since September 25, and has sold in the mid $ 20's as recently as early September. The multiple sales, totaling 9.3 million shares @ $ 27.09- $ 33.07, by the CEO and CFO, since mid September is affecting investor confidence and putting downward pressure on stock price. This unusually large disposition may be sending the message that the stock is fully valued in the near term.
The external environment remains uncertain. After ignoring the governments failure to pass a budget yesterday an attendant partial shut down, the broader market is selling off today. The far more serious debt limit deadline of October 17, is close at hand. NPSP stock can not overcome a broader market correction that may ensue.
As indicated in previous postings I am very positive about the companies clinical prospects mid to long term, but believe for the next several weeks the risk/reward is more heavily weighted to risk. Until September 26, NPSP was a large holding in my portfolio of stocks that typically ranges from 3-5 dozen at any given time. I intend to reestablish that holding either when the stock again reaches the mid $ 20's, resolution of the budget and debt crisis overhanging the market, or a positive NSPS specific catalyst, reigniting share appreciation.
NPSP continues to experience technical weakness, that is relevant to investors who establish core positions and then trade around those positions as stock technical's and external market moving events dictate. For the many investors who identify a good stock, like NSPS, and hold for the longer term, the trading opportunities/risks are a blip on the radar.
NPSP is in the third consecutive day registering lower high's, lower low's, and if the trend holds up today, lower closes. The stock is down 3%, on relatively high confirming volume, since September 26 close. A combination of weakening technical's, heavy recent selling by the CFO and Chief Medical Officer, a month of traditional institutional sales by investors seeking to lock in 2013 profits, and a federal budget and debt limit driven external environment poses significant downside risks over the next several weeks. This is compounded by the limited possibility for positive company specific announcements until the Nov 4 earnings report.
Taken together the stock can reasonably test the $ 25 price reached as recently as September 3, or even the low $ 20's experienced in August. We are obviously discussing risk adjusted probabilities, certainties are only available to market historians chronicling the past.
There is very little that is falsifiable in your statements about how "technical weakness", "confirming volume", and "debt limit driven external environment" could reasonably make the stock "test $25". And your writing style needs some work (sorry, but true). I think it might be just as illuminating, and far more entertaining, if you used the phrenology of Dr. Nader's lumpy head, or what a mischievous goat told you, to tell us the stock's prospects.
I am loath to comment on this. This is the first time ever. But biotech stocks obviously often do not follow this kind of macro analysis. Look at any of the star biotech stocks right through the GFC and you will see no correlation with external factors. REGN, BIIB, HGSI, etc, etc, etc, I bought shares in NPSP at 3.00 in 2006/7 before the GFC, more at about 9.00 last year. No correlation with much more serious events. What if I had sold out. for short term concerns? If those market estimates that Nader discussed in the last CC are realized, this stock has all the signs of being a star. Probably $100+.
The problem with selling out in biotech on macro criteria is that you can get fried (a technical term from economics) Just look at the jump last friday, no news whatsoever and it was up 10% at one point, and a bigger jump than any fall likely from the external factors you discuss. I understand what you are saying and the broader market may be more unstable, but all the signs are showing that none of those concerns, even if realized, will apply to NPSP.
I really believe that there is almost no chance no of 25 and zero chance of 21, unless there is toxicity, fraud in the trials, or marketing failure etc.
Just my opinion. But these posts here are way off the mark. IMO
But good luck if you are correct, it will be a great get.
Can't agree more with translationhell's post. I used to be an active trader until I sat down and looked at every monthly brokerage statement over five years. I quickly figured out that it's easy to trade too much based on the big stories of the day. If you own stock in a good company with good management, their story makes sense, and there's no competition, just hold on.
For example, I traded in and out of NPS - and bought a boatload when it was $4 a share. I've done well. But if I had simply held onto NPS, I would have another 3,000 shares than I currently do. That's an expensive lesson in overconfidence in your trading abilities!
NPSP has a history of big increases in share price for 3 weeks to a month followed by the stock consolidating for a similar period of time. It appears that we have entered the breather phase after a significant run up from August 9- September 10. As EyesandEars suggests, the next several weeks also have some major pot holes in the road ahead.....Fed Taper, Debt Limit, Sequester, and Syria. I agree that unless NPSP rebounds strongly tomorrow, the September risk outweighs the reward. The stock will likely resume it's growth trajectory in October, but September could manifest a testing of the 20 and 50 day SMA support levels.
crkenmore and echuck81,
NPSP is experiencing a 2.13% drop today on top of its 5% correction yesterday. As I previously suggested this retrenchment is likely to accelerate since it is being confirmed by high volume and weakening technicals. The 12/26 day MACD is very close to crossing below the 9 day. The RSI has been declining since yesterday, and the Stochastics are telegraphing an overbought condition.
NPSP is a very promising mid to long investment whose short term share price has gotten beyond it's skiis. The momentum, volume, and technicals are confirming that the S/T correction will probably test the mid $ 25 support by next week and could test the mid $ 21 support before the end of September. After a bottom and reversal have been decisively established this month, NPSP will resume it's share growth trajectory and surpass $ 30.
I would agree with your analysis. I think the market is 15% over valued at these prices in general. The 2 wild cards are the improvement in Europe and Japan. I also think China needs to continue to grow at 7 to 9 percent to keep the up and coming middle class happy.
I also think the sequester is good because there many cuts in defense department. There is so much wasteful spending defense. The cuts will not have much effect on there ability to defend the U.S.