The acquisition of Avcom has good upside potential if one considers the expected growth in the social casino market. In addition to this, the company is also actively attempting to leverage the growth story in the online / mobile gaming and the fantasy sports segment. The FanTD and Hammercat Studios businesses have good growth prospects. These three businesses will shape the long term future of the company. It is imperative for the management to continue its efforts so that the operations begin to yield cash inflow and tangible results. The Avcom acquisition was financed with shares, and future payments, based on achievement of certain revenue metrics, will again be made in terms of shares. In an article on seekingalpha, the acquisition was valued at around $1.5 million upfront considering the value of 491,000 shares initial payment, and around $1 million earned-out payments over 18 months (330,000 shares). There will be no immediate pressure on the cash flow, and it makes the sellers stakeholders and partners in future success. Avcom, which will become part of MGT Studios after the acquisition is complete, will be interested in the success of the venture so that the earned-out becomes payable. The company has got access to the talent of Avcom, including its lead artist. Avcom's founder, Jeremy Avin, will become GM of MGT Studios to manage the online and mobile gaming part. This segment has seen large acquisitions like IGT's (IGT) purchase of DoubleDown Interactive for $500 million and Caesars' (CZR) purchase of Playtika for more than $100 million. The SA article mentions that casino companies and investors have put in more than $2.2 billion into acquisitions of social casino games companies in the past year or so. It may take time for these businesses to grow and develop into major contributors for MGT, but it is good that the company has entered into these high potential segments without parting with too much cash.
In the 10Q filed by Senesco for the quarterly period ending September 30, the management has expressed confidence about the progress of the trials. The President of the company stated “We are pleased with the progress we have recently made in the SNS01-T study. Enrollment in cohort 3, where the dose level is a four-fold increase in the dose level in cohort 2 from 0.05 mg/kg to 0.2 mg/kg, is proceeding at a better pace than the previous two cohorts. If we do not have any additional dropouts in this cohort, we should be in a position to announce the results from this cohort within the next month.” The preclinical cancer models in mice had yielded encouraging results at this dose. During the quarter, it began treating patients at the Company’s newly opened clinical-trial site at Seattle Cancer Care Alliance, and also completed an equity offering of $1,725,000 in gross proceeds in October 2013. It received a revenue of $100,000 which relates to a milestone payment in connection with an agricultural license agreement. The loss in Q1'14 was $1.8 million or $0.78 per share compared to $2.7 million or $2.52 per share in Q1'13. The decrease in the loss applicable to common shares was primarily the result of a decrease in a non-cash loss on settlement of warrant liabilities and decrease in dividends on preferred stock. Cash & equivalents on September 30, 2013 were $789,176, compared to $1,602,294, as of June 30, 2013. In October 2013 the Company received net proceeds of approximately $1,505,000 from the placement of common stock which has improved the cash position. The Company plans to fund future R&D and commercialization activities by utilizing their current cash, by achieving milestones set forth in current licensing agreements, by execution of additional licensing agreements, and through the placement of equity and / or debt instruments. It has sufficient cash on hand to maintain operations till March 2014.
The company will announce the results of its phase 1b/2a trials of SNS01T shortly. It recently announced that it will make two presentations on SNS01-T for blood-borne cancer care at the 55th American Society of Hematology (ASH) Annual Meeting and Exposition to be held from December 7-10th in New Orleans. The management stated that the company will present a poster to provide an update on the current results of the trial and it will also make an oral presentation of new results with SNS01T in non-clinical studies. The trials are still in preliminary stages, and the tumor reduction results achieved in preclinical trials are indicators. The FDA approval etc. may take a couple of years. The main purpose of the trials so far has been to test the safety and tolerability of SNS01T. A secondary purpose is to explore whether SNS01T is an effective treatment for multiple myeloma, mantle cell lymphoma and diffuse large B cell lymphoma. However, the results so far have been encouraging, and if the cohort 3 trials are also as good on tolerability and efficacy, then the confidence will increase. It is good to invest in a development stage company when it is relatively ignored and undervalued. That maximizes the chances of exponential returns. However, the attended risks are also high, and hence one needs to play keeping that in mind. For Senesco, the going so far has been good, and the upcoming trial results may be a trigger which can take the stock much higher. Many analysts are positive on the stock, though intervening volatility in the stock is likely. As mentioned by one analyst, the stock is highly undervalued compared to peer companies at similar stages of development. Furthermore, investment by experienced insiders like Chairman Harlan Waksal also indicates the potential of the company's technology.
The company announced the acquisition of Avcom, a New York City based gaming studio focused on building social casino games for mobile devices. The acquisition is expected to be completed in 2 weeks. MGT expects to issue approximately 491,000 shares of restricted common stock to acquire full ownership of Avcom. In addition, a contingent payment of up to an additional 330,000 shares of restricted common stock is required if certain revenue metrics are achieved within 18-months. Avcom will operate under the name MGT Studios and the wing will oversee the company's online and mobile gaming properties and digital marketing. Founder Jeremy Avin will be the General Manager of MGT Studios to lead the effort. The acquisition brings to MGT the gaming studio, a proprietary software platform for secure gaming, mobile development, and sophisticated analytics. The company will also will gain access to expertise in the areas of digital marketing and real money gaming. The Avcom team includes a former IGT lead artist who has designed popular slot machines, including theme based slot machines like one based on Sex & the City. Avcom brings in over 650K slot machine players from its existing instant win game offerings. The acquisition is likely to help the company in the long run. The stock has reacted positively to the news, but more days are required to confirm the uptrend. The CEO of MGT stated that the acquisition places MGT in a strong position to capitalize on the popularity of the social casino industry as well as adding tremendous value to its other gaming properties. A Morgan Stanley research report valued the market at $1.7 billion with a potential to triple by 2015. Social casino is one of the most profitable social gaming segments, and its success has been validated by high profile acquisitions like those by IGT and Caesars.
Senesco will make two presentations on SNS01T for blood-borne cancer care at the 55th American Society of Hematology (ASH) Annual Meeting and Exposition to be held from December 7-10. It will provide an update on the current results of the Phase 1b/2a trial. It will also make an oral presentation of new results with SNS01-T in non-clinical studies. The abstracts to be presented include “Phase 1b/2a Open-Label, Multiple-Dose, Dose-Escalation Study To Evaluate The Safety and Tolerability Of Intravenous Infusion Of SNS01-T In Patients With Relapsed Or Refractory Multiple Myeloma, Mantle Cell Lymphoma, Or Diffuse Large B Cell Lymphoma" and "SNS01-T Exhibits Significant Anti-Tumoral Activity In Models Of Multiple Myeloma and Non-Hodgkins B Cell Lymphoma and Induces Cell Death In Malignant But Not Normal B Cells". In case the results come in better than expected on the safety & efficacy fronts, then the stock could start a sustainable upward movement. The results in the pre-clinical trials were extremely encouraging, and the cohort 1 & 2 results were also good. However, the dose in cohort 3 and 4 are much higher, and hence it will be interesting to note the tolerance by the patients and the associated side effects. The efficacy is likely to be better at higher doses, but tolerance / side effects will hold more importance than before. Analysts have pointed out that the stock is undervalued compared to other development stage companies. The fact that insiders have put in money in the company at a much higher price than the current market price of the stock indicates their confidence. Chairman Harlan Waksal's investment at $26 is significant as he has the relevant experience in the biotech sector to understand the potential of SNS01T. He is surely confident of the prospects.
The stock has been in the news recently. A couple of Articles on seekingalpha have expressed positive opinion about the future prospects of the company. Chairman Harlan Waksal's faith in the company is one of the reasons for analyst confidence. He had purchased the company's stock at $26/share in 2012, and has personally secured a $3 million credit line for the company. This investment indicates that he is confident about the future prospects of the company's development stage drug candidate SNS01T. He has a successful track record, and his opinion needs to be given due consideration. Waksal is the co-founder of Imclone, which he had sold to Eli Lilly (LLY) for $6.8 billion. Another director, Christopher Forbes, had also acquired the company's stocks at the same price. Insider purchases signal their optimism about the future. Results in preclinical trials, and cohort 1 & 2 (multiple-myeloma patients) were encouraging. Cohort 2 results were declared in June, and cohort 3 results are expected in a few weeks. The cohort 3 results may lead to a positive reaction if the results are good. The market may begin to value the stock at much higher levels. SNS01T has use in other indications like inflammation and ischemia. Senesco owns numerous patents related to its drug candidate, with applications in agriculture (increasing crop yield), programming of cell death etc. However, the drug candidate has two to three years to go before it receives FDA approval. The trials will require funding from time to time to take the research forward. There is intense competition in the field, though the size of the market also provides a huge opportunity. Like many development stage biotech companies, the risks of investment are relatively high, but the reward is also likely to be commensurate. As mentioned in one SA article, Cohort 3 results could be the near term catalyst.
Gold has remained weak and is unable to make decisive positive moves. Till that happens, the nervousness will continue. It is possible that the sluggishness will continue for a long time. Pershing hired an engineering consultant to update several key permits for the mine. CEO Alfers stated that the expertise of the consultants will help Pershing optimize the design of the expanded mine and secure the required permit modifications. Most importantly, Alfers stated that Pershing is well situated to become Nevada's next new gold producer because the company already has a fully constructed and permitted gold recovery facility for its gold resources. The company is poised for fast-track resumption of gold production with only modest capital expenditures to re-start the entire operation. The reaction of the stock to this news was muted, but one cannot ignore the fact that the company has obtained the necessary funding for getting close to production, and is declaring that it is going to start production soon. The insiders are putting in money regularly, and Barry Honig has acquired more than 1.1 million shares in last two months alone. Out of this, 425,000 shares were purchased during last week. Its cost of production is expected to be extremely low, so even the current price scenario is not too bad for the company. Many analysts have calculated the expected cash flow in case the company is able to produce 50K ounces as per plan. However, the company has not come out with a time frame for start of production. That is very much required so that one knows the anticipated schedule. That announcement will be a positive trigger for the stock. In any case, gold has to do better than what it has done so far otherwise the mood will remain circumspect. It needs to move beyond $1350 to indicate that the correction is getting over.
Alexander Poltorak, who has extensive experience in the IP monetization industry, was recently appointed as a director in the company. Poltorak was the Chairman and CEO of General Patent, an intellectual property management firm focusing on IP strategy and valuation, patent licensing, enforcement and brokerage. On his appointment, Hayes stated that Poltorak's extensive experience in the patent monetization industry will provide valuable governance leadership to Spherix. This has also been mentioned in an article on seekingalpha. The author stated that Poltorak is a pioneer in this industry and has looked at more patents than almost anyone over the past couple of decades. He has spent his working life focused squarely on the intellectual property business, and his decision to join Spherix is another strong indication of the quality of the company's portfolio. In addition, the deal with Rockstar and the fact that Hayes is at the helm makes a case for investment in the stock. However, the author also mentions that it is difficult to value the patents owned by Spherix, and the stock is extremely volatile due to the low float. The transaction with Rockstar involved acceptance of shares of Spherix as consideration and also a share in future profits from the patents granted to Spherix. So Rockstar is turning the patents over to Spherix which is highly motivated to extract value from them. The track record of Hayes is well known, and the fact that Hayes has joined Spherix is an indication of the value that he sees in these patents. Amongst the risk factors, the author mentions that Spherix is just beginning to explore ways to extract value from the patents, and there is no significant current cash flow from these patents. It is also difficult to predict the future cash flows these patents may generate.
Earnings is likely to be the next trigger for this stock. It is expected to get close to achieving profitability on a net basis in Q3. One will also get an indication regarding the expected regularity of the revenue flow in subsequent quarters. The $1.52 million revenues earned by the company in the second quarter has changed the outlook towards the company, but things will change decisively once it gets close to achieving a positive bottom-line. It recently announced the acquisition of four U.S. Patents relating to process automation in production and enterprise resource planning. Three out the four main portfolios possessed by the company are already generating settlement revenue. The Q3 earnings will provide details about the magnitude of the inflows associated with the settlements. Marathon is already working with its partner IP Navigation to monetize the Bismarck portfolio. Marathon has $6.4 million cash and zero debt on books. That makes the company financially strong, but still it needs a regular inflow and positive bottom-line. The tear sheet of the company mentions that it has an experienced and proven team, especially due to the strategic relationship with IP Navigation. The cash can help it acquire more patents, and also pursue monetization strategies for other patents. Operating leverage is expected to provide opportunity for near-term operating profits and expansion of operating margins. However, the low float makes the stock extra volatile. So news has an exaggerated effect on the price movement. Institutional investors had put in their money in the company at $5.20, so that could be a support point in case the stock corrects from current levels. If the company is able to achieve profitability in Q3 as expected by many analysts, then the stock can do well. The long term returns will depend on the consistency of the inflow and the ability of the company to keep associated costs under control.
A recent article on SA mentions Biozone as one of the good bets in the sector. Author's opinion is mainly based on the possible benefits of the recent deal with MusclePharm (MSLP). The author states that the company's business prospects have improved over the last few quarters due to deals with OPKO Health (OPK) and MusclePharm. The $2 million investment into BioZone by MusclePharm suggests that it may provide BioZone with high volume business. The main benefit for MusclePharm could be reduction in production costs which could help it improve its bottom-line margins. Importantly, the author mentions the possibility of acquisition of the contract manufacturing operations part of Biozone's business. The author considers this a possibility due to the size of the investment made by MusclePharm. The high fixed costs of the manufacturing can be recovered if the volumes increase, and profit margins will expand. Cost of goods sold was about 70% of revenue in H1'13, but it will come down to 50% if the sales increase to $30-40 million per annum. The author estimates $10 million profits if that volume is achieved. Considering that MuscelPharm has an annual turnover of nearly $100 million, shifting 20% of the production can change the fortunes for Biozone's contract manufacturing business. Importantly, if the cost of production of MuscelPharm's products come in lower due to QuSomes technology, then it will attract the attention of other manufacturers. In addition, the technology can help improve the efficacy of the supplements. Generic drug manufacturers like Teva (TEVA) are also trying hard to improve margins, and the competition is often price based. Most importantly, Dr. Phillip Frost is at the helm in Teva and OPKO, and he is on the lookout for opportunities to reduce production costs. OPKO is already testing the technology, and investment by another of Frost's companies, MusclePharm, indicates that he has seen potential in the technology based on testing so far
One understated positive about Usell is the fact that billionaire investor Dr. Phillip Frost has an interest in the company. Recently, the stocks owned by him have multiplied several times. He purchases stocks before these companies are noticed by other players. He surely has seen potential in the prospects of Usell. The awareness about the options for selling used phones is increasing. Launch of new versions of iPhones always leads to a spurt in people offering to sell their used handsets. The iPhones depreciate much less than the other smartphones. While iPhones lose 5% of their value every month, android phones lose 10%. Even Apple has an in-store trade-in program to Reuse and Recycle the used handsets which gives credit for the old handset in case one purchases the new phone. This has further increased the market for used phones. If people get better price elsewhere, and that too in cash instead of credits, they will surely be tempted to try the other options. This will bring in competition, but also increase the size of the market. An article on The Guardian had previously stated that currently 3% of the new smartphone sales are cannibalized by used handsets. This figure is likely to grow to 8% by 2018. Used smartphone market is poised to grow exponentially from 53 million to 257 million units over the next five years. Importantly, phones are not the only devices which can be sold, other electronic devices which are lying forsaken at homes can also be monetized. Even Usell is considering other high value, low weight items which could suit its business. Usell website is considered better by many as the process has less hassles, and there is better price discovery due to the fact that it works with 40 sites that purchase used phones and other devices.
The upcoming earnings release will be the short term trigger for the stock. The last few months have been good. The stock has moved up 33% on a 52 week basis. The uptrend has been continued since May, and it is nearly 65% above the 52 week low. If the numbers are better than expected, the stock will gain even more momentum. Analysts are positive based on the long term potential of the company, especially after the release of the latest plans and operational strategies etc. The competition is fierce, and ultimately a large part of the competitive advantage is based on price. TMUS is aggressive and the acquisition of MetroPCS is likely to help it achieve operating efficiencies leading to large savings. The improved network experience and range of offerings related to smartphones can help it gain more market share. Smartphone sales is expected to be play a major role in increasing the subscriber base and ARPU. The competition is getting more fierce, and there has been some consolidation. The acquisition of Leap Wireless (LEAP) by AT&T (T) will make things difficult as LEAP operates in those regions where TMUS is active. Pressure on the margins will continue, which makes it difficult to improve the financial metrics. An article on seekingalpha had mentioned that with the increasing demand of high bandwidth, TMUS might face spectrum constraints in the future. It may need to acquire spectrum and go for more M&A to expand its presence. That will add to the debt. Debt is already high, and the company needs to take steps to keep it under check. Spherix (SPEX), a patent assertion entity, has filed a lawsuit against the company alleging infringement of its patents. For T-Mobile, the Q3 numbers will indicate the impact of the recent moves by the company. The MetroPCS acquisition will also begin to impact margins over the next few quarters.
The stock has corrected significantly from the highs made just before the earnings. Resignation of the CEO had a huge negative impact. The sell-off was accompanied by huge volumes, and the recent gains have been totally eroded. It is back a the lower end of the range. The revenues came in at $5.059 billion, slightly better than estimates, while the EPS was 84 cents. The full Year 2013 net revenues are expected to be between $19.7 and $20.3 Billion, and the Non-GAAP diluted EPS is expected to be between $4.95 -5.05. This indicates that the topline is expected to remain flat, while the margins will decline as expected. Some analysts have expressed confidence in the long term prospects of Teva. One analyst expects the margins to improve on the back of the spending cuts. The savings are expected to reach $1 billion a year by the end of 2014 and $2 billion by the end of 2017. This will improve the EPS over the next few years. The author forecasts that the stock could command a share price of around $50 in 2015 and $60 in 2017. The returns appear to be good if one considers the dividend yield. However, there is uncertainty related to its main drug Copaxone. The declines could severely dent the top-line and 2014 could be a tough year. However, the management seems to be confident about the prospects. The stocks owned by Dr. Frost have done extremely well recently, and he works with his other companies to explore synergies. e.g. there is a possibility of Biozone's (BZNE) proprietary drug delivery system QuSomes to help generic drug manufacturers reduce manufacturing costs. For Teva, the sell off is a signal that it may be very difficult for it to cross the higher end of the $36-42 range. The good part is that so far $36 has always provided support.
The company managed to do well in the earnings. The numbers were better than estimates for revenues, while the earnings were in line with what the analysts were expecting. The revenues increased 24% to $58.6 million, compared to $47 million in Q3'12. The net income (GAAP) increased 11% to $8.4 million compared to $7.59 million in Q3'12. The last one year has been good for investors as the stock has delivered excellent growth. The management improved the revenue guidance for full fiscal 2013 to around $237 million, and the forecast for net income (non-GAAP) is around $52-53 million. For Q4'13, the revenue guidance is $60.2 - $60.6 million, and net income (non-GAAP) guidance is $9.2 - $10 million. Barclays have increased their price target for the stock from $18 to $20, and Zacks upgraded it from underperform to neutral with a PT of $17.90. The consensus rating for the stock is buy, and the PT is around $20. This indicates some upside from current levels. For the first nine months of 2013, the revenue was $177.22 million and the net income was $33.78 million compared to $146.13 million and $28.85 million respectively in the corresponding period of 2012. This is an increase of 21% in revenue, and 17% in net income. The sector is buoyant as more and more companies are asserting their patent rights. Several have filed patent infringement lawsuits against much bigger companies, and companies like Marathon Patents Group (MARA) have got settlements / licensing revenues for their patents. The management guidance indicates that RPXC will post growth in top and bottom-line in 2013. The stock has reacted positively, but more trading days are required to confirm that the momentum is building up. The stock has to cross $20 decisively to get into a higher zone.
The EPS was better than expected, though the revenues were a bit below estimates. The cable communications segment revenues increased by 5.2% and the NBC segment revenues went down by 14.2%. Within the cable communications segment, the TV subscribers have declined from 23 million to 21.6 million and the broad band subscribers have increased from 17 million to 20.3 million over the last three years. In the NBC segment, the broadcast TV revenues went down sharply, but the cable networks, theme parks and filmed entertainment businesses posted modest growth. Some articles on seekingalpha have expressed positive sentiments about the stock. The company has posted decent numbers consistently. As mentioned by one analyst, the company's three-year revenue growth is higher than the industry average. The fair value of the company's stock was calculated at nearly $100 indicating a decent upside potential from current levels. The dividend yield is also better than industry average. Another analyst stated that the company can benefit from its expanded partnership with CBS as it will help Comcast retain its existing subscribers and attract new subscribers. The stock has appreciated consistently over the last two years, and the dividend payments have been increasing consistently over the last few years. The movement has been backed by fundamentals as the company has posted good growth in top and bottomline. The revenues have grown from $35.7 billion in 2009 to $62.5 billion in 2012, and the net income has increased from $3.6 billion to $6.2 billion during the same period. The diversification of the revenue stream gives it stability. It is on the lookout for emerging high potential segments, and recently made a small investment in the fantasy sports where companies like Yahoo (YHOO) and MGT Capital Investments (MGT) have put in their money. Comcast seems to be a good long term bet mainly due to its consistently good performance.
The last few days have seen the stock rebound with slightly higher volumes. It had corrected after making its 52 week high in early September. It has appreciated 464% in 2013, and 393% on a 52 week basis. The merger with TransEnterix has boosted the sentiments, and the support of Dr. Frost is also one major factor responsible for increased investor interest. The company had raised $30.2 million just before the merger, with TransEnterix contributing 65% or $19.7 million, and Dr. Frost and other investors putting in the balance 35% or $10.5 million. The money has increased the prospects of the combined company. Both SafeStitch and TransEnterix will benefit from stronger finances and also from the expected synergies. Resources are critical for companies at this stage, and backing of Dr. Frost can help them get more capital from time to time. He has the resources and experience to help the company explore partnerships with other investors. Frost is on TransEnterix's board, and is also heading huge companies like Teva (TEVA) & OPKO Health (OPK). He explores synergies between his companies. Recently, MusclePharm, where he has a stake, invested in his company Biozone Pharmaceuticals (BZNE). Biozone owns the high potential proprietary drug delivery technology QuSomes, and MusclePharm can benefit from the technology to increase efficacy of its supplements. For TransEnterix, the merger can speed up the development of flexible minimally invasive surgical technologies, and SafeStitch can develop its robotic system SurgiBot and other products. It is important to remember that the benefits of the merger will take time to translate into numbers. The stock has already moved up quite a bit to factor a lot of the future positives. The sharp move has increased the possibility of corrections. So one can tag along, but with a clear stop loss in mind.
The earnings are going to be released soon. That will be the immediate trigger for the stock, and will determine the short term trend. Last time it was able to exceed expectations, and the stock had gained momentum to scale new highs. The revenues had grown by 7% to $2.48 billion with a net loss of $93 million. Now It is already up by 96% over a 52 week basis, so negative surprises may lead to profit booking or a deeper correction. The breakout over $16.50 was great for the stock, and now it is at multi-year highs. So there are hardly any resistances, and positive surprises can add to the upward momentum. MGM has shown some improvements recently, but it needs to do better to become profitable on a net basis. The high levels of debt increase the risk, and the interest payouts put pressure on the margins. MGM had $13.11 billion debt, and the cash was $1.38 billion. The ttm revenues are $9 billion and the net loss is $1.49 billion. So the numbers are not that great. The entire sector is high on leverage, and the bottom-line of most major players is negative. In another development, a recent ruling in the patent infringement case filed by MGT Capital Investments (MGT) was largely positive for MGT, but it stayed proceedings against MGM pending litigation against some other defendants. As mentioned in an article on SA, MGM has other drivers like the launch of Delano Las Vegas which is expected to start before the end of the year. These improvements are likely to help the company improve the top line over the medium term. However, the real test over the next few quarters will be improvement in the bottom-line.
Though there has been a slight correction, the stock has done well over the past few months. The stock has run up around 90% over the last one year. The Q3 earnings are going to be released soon, and that could be a trigger for the stock. The stock can gain more momentum if the earnings are better than expectations. Over the years, the losses have continued, and the topline growth has also not been too good. It has reported losses in the last three quarters, and the ttm loss stands at $125 million on a revenue of $1.23 billion. High leverage is common in the industry, with many of the big players having a negative bottom-line for many years. In addition, some of the bigger names are facing a multi-billion dollar lawsuit filed by MGT Capital Investments (MGT) for which Markman hearing has been fixed. A recent ruling in the case was largely positive for MGT, and it stayed proceedings against Caesars, MGM and Penn National Gaming pending completion of litigation against some other defendants. For Pinnacle, the level of debt will increase after the recent acquisition of Ameristar Casinos. The acquisition is expected to be cash accretive, and will help it increase its market share significantly. Analysts are largely positive about the stock. Though Zacks has downgraded the stock a few days ago. The price target is $28.20 which indicates that even they expect some upside from current levels. The rating is now neutral, compared to the previous rating of outperform. Barclays had increased the PT from $22 to $29 last month, and have an overweight rating. Deutsche Bank also increased the PT from $24 to $30 with a buy rating. JPMorgan Chase had a PT of $31 with an overweight rating on the stock. The consensus rating is Hold, and the average target price at $23.60.
The stock has done well after the results, and the volumes have also been better. The recovery in gold prices has obviously helped matters, and earnings helped it do better than many stocks. However, the ups and downs in the stocks continue. The underlying nervousness resurfaces as soon as there is any drop in gold prices. The correction was due and necessary. The rally since June was a bit too fast and one sided, and a retreat has helped make it more believable. It is still not out of the woods, and needs to spend several days above critical levels, and cross hurdles convincingly. News from the Fed and other economic data may keep the volatility high. The leverage is high as the debt is $960 million. The company had lower in cash as on Sep 30. Cash has been declining and the debt has been increasing over the past few quarters. The dividend yield is around 2.9%, and reduction in production costs can help increase the margins if the gold prices remain firm. The outlook of the sector is better, and managements are getting more confident. Pershing Gold (PGLC), a development stage company, recently announced that it had taken steps to start production as per schedule. For Agnico, the first nine months of 2013, saw a net income of $46.8 million compared to $228.1 million in 2012. Lower commodity prices and the Kittila shutdown in the second quarter of 2013 adversely affected the results. The production guidance has been increased to 1.06 million ounces of gold, cash costs are expected to be lower than previously guided, at approximately $690, and the all-in sustaining costs are expected to be $1,025 per ounce, better than the previous guidance of $1,100 per ounce. This indicates some improvement in operational performance.
Alamos has again done better than many peers. It did not correct as much as many other stocks, and the last few days have seen a good recovery. The recent upward movement has been more stock specific. The important levels have held, but the hurdles need to be crossed by gold to confirm the recovery. The volatility has been extremely high over the last few months. News from the Fed or other economic data may impact the movement from time to time. Alamos is nearly 60% above the June lows, and needs to cross $17 decisively for the uptrend to gain strength. Earnings are being declared in a couple of days, and that will decide the short term trend for the stock. Analysts have been largely positive on the stock, with some upgrades recently. Credit Suisse has a target of C$16.50, and RBC capital has a PT of C$18. Bank of America also has a buy rating. The consensus rating for the stock is buy, and the average PT is just below C$18. The sentiments related to the overall sector are not as gloomy as before, and many are seeing long term value. The managements are more confident. Pershing Gold (PGLC), a development stage company recently announced that had taken steps to start production as per schedule. If gold is able to come out of this correction strongly, then it will be more of a stock picker's market. Alamos scores on many points compared to its peers as it has a low cost of production and zero debt. The cash position is also good as the company had $467 million in cash as on June 30. The valuations need to be watched, and compared with peers. Further moves in the stock will be largely dependent on the earnings and how gold prices move from here on.