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Pernix Therapeutics Holdings, Inc. Message Board

  • chubhammer chubhammer Jun 15, 2011 12:08 PM Flag

    Not worth the risk/reward

    A few telling signs.

    1) I talked to some docs about Cedax, every one of them said they wouldn't use it as a "first line" treatment for a child's ear infection. They all said that they would use amoxicillin first, which is less expensive and better tolerated. On top of that, they all said that there is at least 6 generic cephalosporins on the market that are all cheaper than branded Cedax! Cedax will never see the the type of growth the company is promising.

    2) In the two quarters that were supposed to be PTX's best, Q4 and Q1, they only did .06c and .04c, way below (66% below) analyst estimates. No matter how you look at it, or rationalize it, this company is way underperforming, largely because Cedax is underperforming. They say most acquisitions turn out to be a bust, Cedax is probably no different.

    3) The cold/ allergy products are completely generic (as in their active ingredients are not in any way unique, tons of products have the same ingredients!), in a highly competitive market and aren't worth much in a sale (or valued much in the stock price maybe 8 to 10x earnings, tops). Also, the cold products franchise is slowly decaying, and thats why the mgt team is anxiously trying to sign as many agreements they can to diversify its business. Because its bread and butter cold product line has been in trouble for awhile now. Expect stagnant to falling sales and decreasing margins on these products.

    4) Company has diluted shareholders over the last year by 20% by issuing stock, options, to employees, mgt, and even to do the Parapro deal.

    5) Insiders are lining up to sell their shares, usually a telling sign! Read last 8k.

    Not worth the risk/ reward here.

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    • Good intelligence. Cedax COST OF GOODS kill the margins.

    • wow, right on! I feel compelled to put in my two cents too. Stock is still trading at 37x trailing EPS. Still looks expensive, with earnings consistently falling and future estimates dropping like a rock. Industry Comps are at 18x-20x (which is historically its highs). I will remain short this stock.

      Analyst estimates will have to come down again, estimates moved down 3 times in last 3 months.

      PTX did .44c EPS in 2009, .40c in 2010 (though when you back out one time tax gains its lower than that), and now analysts have them doing only .35c in 2011 (and will have to lower this estimate as they continue to miss rosy estimates). So earnings have been in a downtrend, yet trades 37x eps.

      Sell side analysts that put crazy estimates and targets on PTX were completely dupped! They all knew the new IR guy (from his previous role) that PTX brought on. The lazy analysts ate up the story like a shark attacking the bait. Unfortunately, the bait was poisoned. Insiders wanted these morons as cover to sell their stock, which is exactly what they are doing now. $18 price targets? What fricken joke these analysts are! No wonder why the average investor gets screwed and doesn't trust wall street. But these third tier analysts don't care, the will make money on this, and then drop coverage and move on to the next BS idea to screw the little guy.

      Now its obvious why the management team did a reverse merger to come public, usually a sign of sneakiness and something to hide! No respectable firm would have underwritten this IPO when they checked under the hood. I say this Management cant be trusted. The cat is out of the bag now, with only these idiot bagholders propping this POS up.

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