Although risks are ever present (see risk factors- SEC flings) IMHO reward risk ratio is favorable
with stock currently at $6.94. A lot of end of quarter cross currents and it seems quite possible
that some high frequency traders, momentum players and trading oriented
hedge funds may have become involved following the very good first quarter earnings
report, and this has created considerably share price volatility.
My guesstimates for EPS---Note these would be untaxed due to substantial NOL carry forwards--
Personally, would like to see significant stock buyback over next 2-3 years which
would enhance EPS and also help to cover option program for key executives and
employees without causing dilution---Not everyone would agree with this.
Jerry and the team seem to be doing an excellent job as related to our Internet of Things
initiatives where we seem to be gaining traction---
Second quarter results to be reported in mid-August should compare very favorably to
last year when company reported EPS of $.06 on Revenues of $23,100,000---I am
currently guesstimating EPS of twelve to fourteen cents on Revenues of $27,500,000
Continue with due diligence efforts and GLTA
Although there are still plenty of risks with BSQR---IMHO there will be PE multiple
expansion taking place over the next few years---How rapidly, and to what degree are unknowns.
Much will depend on:
(1) ultimate investor perception of how rapidly earnings per share
can grow off an estimated base of $.60 +/-?? in current 2015 year.
(2 How sustainable will that growth rate be----
In any event Thursday June 25th 2015--the "Market" --anthropomorphically is
"saying" that BSQR is worth $7.40---
Adjusting for at least $1.40 that could be considered EXCESS (Over and above
what is needed to run the company) CASH-------The Adjusted price currently is $6.00---
Thus we are trading at approximately 10 X Est. 2015 EPS. of $.60 (As adjusted for
excess cash)---Seems low IMHO--
Would suggest everyone should continue with due diligence efforts with focus
on iNTERNET OF THINGS--There are a lot of links to some very interesting
articles--googling up ----"What are Connected Devices"
As suggested in original post some increased volatility has developed, as in
my opinion--- Hedge Funds, High Frequency Traders, etc. may have become involved
in recent months---This is likely to continue and care should be taken in placing
Although this may have been covered in earlier posts, still important
information--does no harm to bring back "to the top"
BSQR in the last few months has been recognized by "The Street" as an emerging growth
stock and this PERCEPTION has resulted in the remarkable performance in this recent
time period--- This was recognized early on by Fuji, Dalton and others posting here (and somewhat
belatedly--but not to late by myself)--- I capitalized "Perception"---in this business "Perception" is pretty close to "Reality".
Three years ago, this company was perceived by "The Street" as a moribund tiny company,
and although probably viable, was destined for mediocre performance over the foreseeable
future---Jerry Chase arrival on the scene in late 2013 and early 2014 started the ball rolling, and
the "Value Stock" label was placed on the shares, as cost cutting and a refocus on growth areas
was implemented by Jerry, the Board of Directors and the BSQR team.---
This year's first quarter results IMHO has generated and attracted some quite strong institutional interest,
probably some Hedge Funds, Momentum Players High Frequency Traders, and hopefully, more importantly some "Buy and Hold" Institutional Investors. ---It seems to me that "PERCEPTION"
changed rapidly, and although IMHO, still not a "Growth Stock:" label (perhaps too early for
that---one quarter does not a growth stock maketh)---nevertheless BSQR over the next 2-3
quarters could possibly attain the "Growth Stock" label---
At this point "Emerging Growth Stock" label, plenty good enough, and as Dalton and others have
suggested, ultimately an expanded PE multiple is appropriate with a 20X EPS Multiple
eminently possible---This creates an opportunity (even from the current $7.50-$7.90+ price
range) for well above average performance over the next 2-3 years.
Early 2017 Price target Guesstimate--$14---Est. annual rate of return from current $7.80-----46%
Stock @ $7.75-----Consolidation and profit taking combined with overall weakness in market----
Today's Microsoft announcement, although anticipated, still a positive---
Suspect that many new investors have come in while some long term holders have
lightened up and/or exited----
Quite a few positives here, not the least of which is a shareholder friendly, capable
management with integrity!
A plausible scenario---Another possibility:
Big Pharma comes along in October with one of "those offers you can't refuse:-----
You are all good and tough negotiators, Very clever playing it close to the vest---I can understand that---
a "wait em out" strategy anticipating a higher offer----OK you win---a new (hypothetical) proposition:
1 share of Gilead (which continues to move higher) for only 2 1/2 shares of Arrowhead---
Using same numbers as above--An ARWR investor holding 3,000 shares now
worth approximately $20,000 receives 1,200 shares of Gilead worth currently $140,000.00---
Multiply by 10 for an investor holding 30,000 ARWR shares ---approximately $200,000---
receives 12,000 shares GILD worth $1,400,000----a 7 bagger from here.
This works out to $46.00 per share for an Arrowhead Research investor---a total market cap
for the company of $2,750,000.00
I agree mab
Perception is pretty much reality in this business---IMHO BOD
should attempt to find buyer for this company hopefully at a
significantly higher price than currently prevailing that would be
called "Doing the Right Thing"!
Well, it looks like you could be right---a potential $10.00 price target
reached perhaps relatively soon and, earlier than mid 2016 (which I had been contemplating)---
Still, likely to consolidate, and could back off somewhat near-term , especially if weakness in overall market---
"splitting the difference, and thinking $10 by December, when the "market"
will be discounting potential $.70 EPS in 2016, and with at least
$1.50 in excess cash at that time---your price target seems reasonable,
and if market starts to recognize this as an emerging growth stock (which seems
to be happening, an expanded multiple higher than what I was thinking could emerge, andstock could well trade higher---
Still, best, as always to be cautious---there are a lot of "snakes in the grass"
In any event $10 IF achieved in six months works out to annualized rate
of return of 50% from here---
Thanks hp, end, wyatt et.al.---much appreciated---I need all the help on this
that can be mustered and generated!
There are many variables in the analytical equation just for ARC:
What is Appropriate Discount Rate
Year when Revenues Commence
Magnitude of First Full Year Revenues
What Multiple of Revenues Appropriate
What is Overall Market Doing
Management Execution Perception
Cash On Balance Sheet
II do like end's idea of derisking this with partnering---
All of the above of course gives no consideration to everything else that
is going on!