These are interesting times. This should really be an ok quarter. It is their best quarter for flonase sales, which should approach $30 million, even though competition has depressed prices. Its r&d should return a little closer to its norm (which is quite healthy) as a recent increase was unexpected due to an acceleration in a product's development (which is actually a good thing). I think 70 cents is certainly within its grasp, and hitk often has a kind of revolving quarterly history of late - a bad quarter followed by a good quarter followed by a bad quarter, etc.
I would have thought that the last few weeks might have seen some strength from unique sources - the ACT merger with Warner might have spurred the usually buyout talks (even though its not happening), and the FDA's Wockhardt closing of one of its foreign plant might have spurred some though that its U.S. subsidiary might have a problem (with flonase), something that would cause a real nice rise in income, however temporary.
But low and behold, no. Maybe the lack of news on the "mystery" product has led some to think the fda is putting a hold on it, leading to thoughts that the fda is putting a hold on other hitk products. Maybe flonase sales are down (at the earnings cc, one analyst stated that, based on some industry report, flonase sales share are rather consistent - does anyone know where one can get such a report??).
Maybe the relative lack of news is simply leading some to unload this stock for more "exciting" stocks and sectors. But remember this, when hitk went through a dry spell about 6 years ago, the stock fell as profits turned into losses, and with the intro of cosopt and then flonase we saw a substantial rise and increase in profits by about $1.50 a share per quarter. Another such rise with the intro of new products could see a $2.00 a quarter profit. We should get a real update on products at the next earnings report.
It has been a very wet spring. That bodes for a high allergy season, which may translate in more flonaise sales/demand. I also remember hitk saying that demand was strong this winter, perhaps because some doctors were prescribing it for symptoms of the flu/cold - to the extent that meant some supplies were depleted, that means that demand could be higher now. That may not translate much into the quarter ending April 30, but may mean something for the following quarter.
And remember, health care kicks in next year, about 6 months from now. More people going to doctors, who might prescribe generics, including flonase.
I wish someone was listening and would tell me if I have a valid though or if I was out in left field.
I thought today's action might have been a result of the earnings report that may come out in the second week in July, and, with some investors taking next week off, wanting to get in because they won't be really available next week just prior to the earnings report (which they think will be nice so they got in a little early, again because of a vacation week next week).
But then I saw that there was a Supreme Court decision that protected generic drug makers - and thought that this was the answer. However, when I looked at other generics, they still went down.
Maybe this Supreme Court decision was better news for the smaller generics who couldn't spread the risk that larger generics could spread?
I want to add a couple of things that I ran across this morning. Earlier this year, after the last quarter earnings release, the Standpoint upgraded hitk to a buy from sell, and put a 43 price target on it. This followed a the lower earnings release, and Needham's downgrade to a hold and 40 price target.
I also notice that over a year ago they had 14 products targeting $1.5 billion in sales. Now it is up to at least $2.5 billion in sales (and a few more products).
The have to begin to get approvals and products to the market. But it is reassuring that, when there were reasons to knock the stock, Standpoint stood buy it. It Standpoint changes it outlook, or another analyst weighs in, that too would be instructive.
We are coming up on earnings in about 3 weeks. I say $67.5 million in sales, and 75 cents in profits.
I use the last quarter as a basis.
We will do more units on flonase, but less price per unit. But some of it might be offset by efficiencies. This is the beginning of the season for flonase. I think they will sell $5 million more than last quarter, generating about 25 cents more.
The cold/flu season is over, but some remained. But there may be some momentum from the new agents and new leader for ecr. Take off 10 cents and 1 million in sales.
I think there may have been some improvement on other products. But it may be offset by the fact that the prior quarter had an uptick because some sales were pushed into that quarter from Super Storm Sandy.
One real plus is the they had an expensive r&d that upped expensive by as much as $2 million - some accelerated step which is actually a good thing (even though it unexpectedly pushed down profits)
We should get some news on the "mystery product" and any new products in the next report (they had said that they expected an fda approval in July for some product).
To those fathers who are longs - have a good father's day.