The stock seems to be gaining momentum again after a few months of uncharacteristic volatility. Despite being a bit subdued during the last few months, the stock has appreciated by 38% over last one year. The company has been in the news for its deal with Inovio (INO), a smaller company in biotech space. An article on Motley fool mentioned Roche as a good stock for conservative growth for those looking to invest in this sector. The first half of 2013 was reasonably good with 5% increase in revenues and 12% increase in core EPS. The HER2 franchise showed 11% growth, and now accounts for 14% of the company's sales. Working with experimental companies like Inovio (INO) can help Roche prepare for the patent expirations which are starting next year. Hercepting ($6.3 billion in sales in fiscal 2012) is likely to face generic competition next year, but is expected to make up for the loss partly due to the new subcutaneous formulation recently approved in the EU. The Inovio deal is expected to be good for the company in the long term as it gives it exposure to the prostate cancer market. In addition, Inovio's Hepatitis B vaccine is also believed to have a lot of potential. It also gives it access to the electroporation technology for drug delivery. The technology is believed to have a lot of potential, though it has to go through a lot of trials etc. Another technology QuSomes from Biozone (BZNE), which is for liposomal delivery of drugs, is also believed to have a lot of potential for increasing the efficiency and efficacy of delivery of drugs. OPKO Health (OPK) is testing the Qusomes technology for various drugs based on a license agreement with Biozone. Ultimately, once these techniques go past the trial stage, they are likely to reduce the cost of production and the therapy. Roche is perhaps attempting to access these advantages by looking at the smaller players.
The last few months have been great for Inovio investors. The stock has multiplied more than 5 times since November 2012 when it made its 52 week low of $0.44. On a ytd basis, the stock is up more than 327%, and even the 52 week performance is not bad at all. A major part of the momentum has been due to the agreement with Roche (RHHBY) for its vaccines and the electroporation technology. Roche has seen potential in the vaccines (especially the one for prostate cancer) and the drug delivery technology. New drug delivery technologies are an area of focus, and even other technologies are being tested to improve efficiency and efficacy. QuSomes, a lipisomal delivery technology by Biozone (BZNE), is known to increase solubility of the drugs. This increases the efficiency of administration and reduces the cost of production substantially. OPKO Health (OPK) is testing the QuSome technology for several drugs based on an agreement with Biozone. As mentioned in an article on Trefis, that technology is also believed to have a lot of potential. The outlook for Inovio has changed dramatically after the deal as the company will receive and upfront payment of $10 million and milestone payments in excess of $400 million. More than the money, the collaboration with Roche will have positive impacts in other aspects of the business also. Roche has kept the option of collaboration with Inovio on other vaccines open. Support of Roche will help in faster trials, and help those products realize their potential. Further, the fact that Roche has seen potential in the company does increase the possibility of other investors taking Inovio more seriously. All this adds to the positivity about the outlook of the long term future of the company. The exact impact of the deal will be known over the next several quarters and years, but the hopes are higher.
Clear Channel has moved about 3% over one month, and there have been some high volume days recently to support the upward movement. The earnings could not do much for the stock despite the fact that the company posted a net profit after two quarters of losses. The crash in June had dented the sentiments, but stock is still up by 45% on a 52 week basis. Fundamentally, the revenue on ttm basis is $2.95 billion, and the gross profit is $1.34 billion. The company is carrying a net loss of around $200 million on a ttm basis, but that is mainly because of the $248 million impairment hit in the fourth quarter of 2012 on account of extinguishment of debt. The debt on books and declining cash position is a bit of a worry. So the fundamentals are not that robust, and one good quarter cannot be expected to change the sentiments. It needs a few more quarters of good growth in top and bottom-line so that investors see some consistency in the performance. Going by the ttm figures, the topline is not expected to show too much growth, though the bottom-line may show some improvement. Growth is not easy due to the competition in the industry which keeps the margins under pressure. The outdoor advertising giants like Lamar (LAMR) and CBS (CBS) provide direct competition. The industry also faces competition from other segments like online advertising. Social media is increasingly being used by advertisers to spread awareness about their products & services. Celebrity influence is being used to encourage people to use the product / services. IZEA (IZEA), a company active in the social media sponsorship space, recently reported results of a survey which point to increasing popularity of native advertising. Meanwhile, insidermonkey reported the hedge fund activity related to Clear Channel which indicated some bullishness in the stance of the smart money. That is a bit encouraging.
Earnings are a few weeks away, and that will be the next major event for the stock. News from the Fed may help support the positivity, but ultimately fundamentals will matter. It has remained stuck in a range for the last few months, and has been unable to cross the $925 level convincingly. It may make an attempt to cross the highs before the earnings, but any rise in the stock price will make the earnings exposure even more risky. The last quarter earnings were not so perfect as some analysts had pointed out areas of concern. As mentioned in a seekingalpha article, the revenue growth was 19% on a yoy basis and the net income increased by 16%, but the investors were not impressed because all but $1 billion of its $14.1 billion revenues came from advertising, and their advertising rates declined. Increased usage of mobile devices is driving down advertisement rates which is likely to make it a bit difficult for Google to maintain robust growth. In fact, other companies like Facebook (FB) and Yahoo (YHOO) are also working out ways to make the transition to mobile devices more beneficial. Mobile usage will ultimately increase the usage significantly. Further, there have also been some reports which have highlighted concepts like banner blindness which can make growth of other online ads more difficult. Native advertising / social media sponsorship is picking up with companies like IZEA (IZEA) doing well recently. The author mentioned Google's efforts to diversify and keep the revenue growth going. The Enhanced Campaign project, which will force marketers to buy advertising for mobile computers and desktop computers in one package, is likely to help. The expected benefits of Motorola Mobility purchase and launches like driverless automobile are also expected to help in the growth efforts over the long term. The author predicted a 10% fall in the price of the stock before the earnings release. The next few days will give some indication whether that will happen or not..
Omnicom has made quite a recovery over the past few days. It is up more than 10% from the recent lows. This is good for the sentiments because the stock had corrected by more than 14% after the earnings. This was surprising as the earnings were better than expected. There was good growth in emerging markets which helped the company post marginal growth in revenues and net income. Importantly, the operating margins also expanded slightly. The stock may take a breather and correct a bit. This is indicated by the fact that the recent upward movement has not been supported by volumes. In any case, the stock is not far away from the 52 week high of $70.50, and that may be another major hurdle to cross. The stock is up 22% on a 52 week basis and is 45% above its 52 week low made in November. An article on SA had recently expressed confidence in the future prospects of the company, stating that it is likely to benefit from the rising demand for digital marketing. There are expected synergies from the merger with Publicis, and the company will become a leading media and communication company in the world. The enhanced digital capabilities will help it adapt to changing times, and improve its customer service. Expansion in Asian and Latin American markets will help the company improve its earnings per share even in the current year. There are also some negatives of the merger as Omnicom and Publicis serve rival customers, which may lead to loss of big accounts. Further, competition in the advertising industry is fragmented and companies need to adapt continuously to the changing landscape. IZEA (IZEA), a company in the social media sponsorship / native ads space, recently published results of a survey indicating the changed dynamics of online advertising. The exact impact of the merger will be known over the next many quarters and years.
The upcoming IPO of Twitter is already drawing comparisons with Facebook. The IPO and the pricing will be debated, and there is likely to be a lot of hype surrounding the event. However, this is likely to be less compared to what happened with Facebook because there could be more caution in the air. The pricing is likely to be more accurate though it is difficult to value such companies. Most of the valuation is in the future potential. The investors are likely to be more cautious after the Facebook IPO. A seekingalpha article mentions that Goldman Sachs is going to be more cautious about the pricing of the IPO after the flak which Morgan Stanley received. The author compares Twitter and Facebook. Both are giants in the social media space, and have grown their user bases remarkably in a short period. Twitter has much less MAUs (100 million) compared to the massive 1.1 billion of Facebook, but both generate a majority of their revenues from ads. Facebook has already shown signs of success at monetizing its mobile user base, and more will be known about Twitter later. The sentiments about Facebook changed recently after the quarterly results showed a remarkable performance on this front. The article mentions that increasing focus on native advertising is likely to drive future growth of both companies. Native advertising is believed to have huge growth huge potential. However, future success in this segment is not going to be too easy, as advertisers are going to Social media ad networks for such services. For example IZEA (IZEA), a pioneer in native advertising, runs a number of these marketplaces, and the number of advertisers are using them to arrange native ad publishing. Hence, social media companies may need to acquire some of these smaller companies, and also diversify to focus on other emerging segments.
The stock has done great recently. It has appreciated by 328% on ytd basis, and is six times the 52 week low made a few months ago. Even on a 52 week basis it is up by 150%, though it has corrected from the high made recently. There have been several articles highlighting the investments made by Dr. Phillip Frost. One article on seekingalpha has recommended to buy NIMU mainly because of the potential of its product and possible interest by OPKO Health (OPK), another company where Dr. Frost has significant stake. Several of the stocks owned by Dr. Frost have done well recently. He purchased a significant number of NIMU shares at average price of $0.05 in April. Dr. Frost is known to be an astute investor with the ability to identify long term growth stories. He attempts to explore synergies between the various companies where he has a stake. For example, he has substantial stake in Biozone (BZNE) which owns a high potential drug delivery technology (QuSomes). There is an agreement between Biozone and OPKO Health (OPK) for testing of the QuSomes technology. The author believes that even NIMU can be part of a larger, long-term strategy which Dr. Frost is pursuing. Dr. Frost may be interested in the company because the products would complement and diversify OPKO's business. All this may be guesswork right now, but the possibility cannot be ruled out totally. However, the financials of NIMU are nothing great to say the least. Revenues are negligible, and improvement in financials is mandatory to justify the recent jump in the market cap. There can be corrections, though the support of Dr. Frost provides some assurance about future possibilities. Still, caution is required because this is a high risk – high reward bet.
A recent article on seekingalpha recommended to buy many of the stocks owned by Dr. Phillip Frost. Castle Brands was on the list. It has done great over the last few months, and is up 125% on a ytd basis. It has multiplied more than 2 times compared to its 52 week low made in February. There are many investors tracking his investments, and the analysts have praised his acumen at picking high potential businesses at extremely low valuations. IVAX is one of his biggest success stories, and the investments in OPKO Health (OPK) and some other companies have also done great. He owns stakes in pharmaceutical companies like Biozone Pharmaceuticals (BZNE) which have done well, and are expected to do even better based on the success of their products and technologies. Dr. Frost attempts to leverage the synergies between his companies. OPKO and Biozone have an agreement for testing of Biozone's proprietary QuSomes drug delivery technology. The SA article recommends to buy Castle Brands because of its huge potential, and the performance in the last quarter. For the quarter ended June 30, 2013, the sales increased by 7% to $10.4 million and the EBITDA improved by 54.9% to a loss of ($0.2) million. Dr. Frost has a 10% stake in the company. There are hopes that the company will make a turnaround over the next few quarters and years, and the stock will deliver great returns to the investors. However, the performance of the company in the next couple of quarters will be crucial in determining the probability and proximity of the turnaround. It is imperative that there is consistent improvement in the fundamentals else, there may be dampening of sentiments for the stock. The recent run up in the stock has made it a bit vulnerable to profit booking in case of slippages etc.
An article on SA has recommended to buy the stock for the long term with multi bagger potential. The author contends that the future looks extremely bright due to high margins in LCD displays, rapid expansion plans, a proven business model currently operating in Shanghai, and the revenue growth opportunity of implementing interactive advertising displays. He has recommended $1.20 as an entry point. One of the main reasons for his faith in the stock is the backing of Dr. Phillip Frost. Frost is known to invest in companies when they are available at very low valuations as he is able to identify the long term potential. His successful investments include IVAX, OPKO Health (OPK), and his other stocks like Biozone (BZNE) are also believed to have tremendous potential. He explores synergies between his companies, like the deal between Biozone & OPKO for testing of Biozone's proprietary QuSome drug delivery technology. The last few months have seen huge moves in many of the stocks owned by Frost. Frost owns almost 32% of Tiger Media's. He had added to his stake in July at $0.81. The company is concentrating on its mall and outdoor LCD advertising business, and by the end of September they will have established more than 115 LCD screens in 23 different malls in the Shanghai Network. According to the author, the sales in the two months of July & August were $2.1 million based on a utilization rate of 10%-20%. This can be extrapolated to annual revenues between $37-75 million. The company does not need to raise more funds as the Shanghai ops are likely to be self funding in six months. Expansion into other parts of China and the partnership with Home Inn hotels network only adds to the potential. The author concludes that Tiger Media presents a solid Chinese company which is striving to make a turnaround. However, like all such investments, the risks are extremely high.
The article on the upcoming Twitter IPO on seekingalpha mentions the growing contribution of native advertising to the revenue growth of companies like Facebook and Twitter. The author compares the two companies and mentions that both the companies derive a majority of their revenues from online advertising. One of the driving factors behind both companies' recent valuations is their adoption of native advertising. Native advertising is a rapidly expanding subset of online advertising, and on Facebook, native ads are placed in the news feed. On Twitter, they come in the form of promoted tweets. Several analysts believe that native advertising will fuel future growth in revenues of these two companies. The author mentions that marketplaces like those provided by IZEA are increasingly diverting ad revenue from social media companies. These provide third party marketplaces through which advertisers and social media publishers can transact without the host platform's input. He cautions investors to keep this expected future competition in mind while valuing social media companies. He states that 'In the same way as display ad placement, native ad placement on social media sites will likely be increasingly arranged by a third party in the future. With this in mind, investors looking to place valuations on social media sites such as Facebook and Twitter should do so with the consideration that alternative revenue streams might be required in the medium to long term to sustain growth.' So IZEA is likely to provide competition as advertisers prefer to use social media ad networks to place such ads. To continue the growth, the companies will need to find ways to counter competition from these platforms. Strategies could include acquisition, and also diversification in revenues to make up for the loss. Analysts expect the spending on this form of advertising to reach $160 million by 2014.
An article on Trefis mentions the QuSomes technology of Biozone as a promising technique for drug delivery which may subsequently be used for cancer therapy also. The QuSomes drug delivery technology overcomes the disadvantages of other liposomal delivery techniques. The traditional techniques are more costly and time consuming. The article is in connection with the licensing deal between Roche and Inovio to develop vaccines designed to treat prostate cancer. The treatment method and the drug delivery technology are important to ensure that the treatment affects only the cancer cells so that there are less side effects. A more well directed treatment can have a proprietary effect in preventing return of the tumors. The DNA vaccination technique of Inovio is supported by its electroporation drug delivery technology. The article mentions the electroporation drug delivery technique of Inovio may face competition from QuSomes. The Qusomes (liposomal delivery) can be an alternative to electroporation because the technique can increase the efficacy of certain drugs in treating cancer. Liposomes are essentially a fatty layer that encapsulates the drug in question thereby reducing the systemic decomposition of the drug and increasing its bio-availability. The cost of producing liposomal drugs can be high and time consuming, but the QuSomes technique is believed to take care of the disadvantages. The name QuSomes is a contraction for “quick liposomes”, and refers to the instant formation of a liposome upon introduction to water. Qusomes have not been applied to cancer therapeutics till now, but may ultimately find place there as the tests on other drugs being conducted by OPKO Health (OPK) progress. If QuSomes technology is proven to be effective in the administration of drugs such as Propofol, it could dramatically enhance the possibilities with liposomal delivery. This could make its application to cancer therapy more effective and less time consuming.
Barry Honig purchased another 300K shares on September 24 at ~$0.37 per share. So his investments in the company continue. The consistent purchases indicate his faith in the near term prospects of the company. Now that the company has got sufficient funds to take it close to production, movement in price of gold becomes a bit more crucial. The outlook can improve significantly if gold can show more strength.
Hayes is expected to pursue various options to monetize the existing patents of the company and also acquire more to add to the portfolio. He has a successful track record, and hopefully the efforts will lead to tangible results on the ground. What the company needs is licensing / settlement agreements which could give it regular and one-time inflows. That will improve the financials and strengthen the balance sheet. It will improve the outlook and lead to long term support of the investors. The backing of Hudson Bay Capital is definitely reassuring, and the experience of Hayes can help the company successfully monetize its patents. Some more information may be required to understand that the strategies are helping it progress towards efficient monetization. Meanwhile, according to a press release, the company continues to increase its efforts at pursuing monetization strategies for its patent portfolios. As per a recent press release, the CEO confirmed that the company is progressing towards full monetization of the suite of 230 patents. It had recently filed complaints against T-Mobile claiming infringement of Patent No. '584 entitled "System and Method for Determining the Geolocation of a Transmitter". It is also identifying other companies infringing its rights for this patent and also for the other patents which it acquired in its merger with North South Holdings and those acquired through the Rockstar Consortium deal. It recently filed claims in respect of its patents against Uniden and Vtech which are manufacturers of cordless telephony. Vtech has revenues of $2 billion and these two companies together control 75% of the cordless phone market. The Law firm Skiermont Puckett LLP is leading the monetization efforts related to this patent portfolio. The firm will also help identify other parties infringing Spherix's patents. Hayes also mentioned that Spherix plans to acquire more patents / portfolios which could compliment its existing IPR portfolio.
The correction was due, and precious metals have obliged. A bit too much maybe, but they seem to be finding support around crucial levels. It is too early to be sure, but it is possible that they may rebound a bit to consolidate. If the supports do not hold, then the stocks may even test recent lows. Coeur has lost all the gains made in August, and has corrected by nearly 25% from the highs made at the end of August. The volatility has been high. Gold has corrected by around 7% from the highs, and silver has done much worse. That has dampened the sentiments a bit. Most stocks of mining companies have declined and are near recent lows. The taper – no-taper news has only added to the volatility. However, analysts are relatively more positive despite the correction. Even for Coeur, Scotiabank & Zacks have upgraded the stock. Scotia bank increased the target price from $5 to $6, and Zacks has a price target of $13.50. Analysts at Raymond James, which initiated coverage on Coeur recently, have put an outperform rating for the stock with a price target of $18. The average target price is just below $20. Even smaller companies like Pershing Gold (PGLC) have been able to obtain funding at market price with its Director Barry Honig making significant investments. This indicates that apart from the analysts, even the managements are a bit optimistic about the fact that the June lows may hold even if the correction runs deeper. The good part is that all companies, including Coeur, have become more conscious about the cost, and the rationalization efforts are already showing results. Further, Coeur recently announced a 91.5% and 96.4% increase in estimates for mineral reserves for silver and gold at its Nevada-based Rochester mine. If silver rebounds from current levels, then the medium to long term outlook for Coeur may improve.
Allied Nevada has remained under pressure for several months now. Even the recovery in gold prices in August could not do much for the stock. An article on SA some time back had mentioned that Gold prices have been the biggest drag on the stock, but increased production costs, delayed construction of a proposed Hycroft mill, and missed production targets due to problems with its leach pad have only made matters worse. The author also highlighted the liquidity issues and mentioned higher risks if gold prices drop further, grades deteriorate, or if an unexpected cash outlay event occurs. However, the author contends that the stock is at extremely low valuations because company's market cap is below even the current assets it holds on its balances sheet. Further, most of the debt is long term and isn't due until 2019. While all this may not help the immediate cash position of the company, the valuations are low right now. The stock is trading at 60% of its book value, and the company still has a good profit margin on a ttm basis. This is better than many peers. The key to success remains reduction in production costs, and also increase in price of gold. The analysts are not that negative anymore, though the recent correction may have made some a bit wary. There have been investments in smaller companies also. Even smaller companies like Pershing Gold (PGLC) have been able to obtain funding at market price with even its Director Barry Honig making significant investments. This indicates the faith of the top managers in the prospects of the sector. For ANV, the next few quarters will be crucial. If it continues to post positive numbers and show improvement in cash position, then it may emerge as a good long-term bet for those looking to invest in the sector. Movement in prices of gold will be more crucial than ever.
The stock has declined by 14% from the recent high made in the last week of August. Despite the correction, it is still up 33% over the last 3 months. This performance is much better than many of its peers. It has shown some resilience during the recent correction in prices of precious metals, and may be expected to out-perform in case there is a sustained rebound. An article on SA recently predicted an 11% increase in revenues for Q3'13, and a decline in net margins. The decline could result in lower dividends. The author states that the company's decision to expand its gold operations will put continuous pressure on the margins. Silver's profit margin will decline to around 80% and gold's margin will decline to around 70%. Increase in the percent of gold's revenues out of total revenues (from 29% in Q1'13 and 32% in Q3'13) is expected to lower the overall margins. Even the last earnings were not good as the revenues had declined by 17% and the net earnings had fallen by 50%. Importantly, the operating cash flows declined by 28%, and the cash operating margin declined significantly. The debt on books has increased over the last few quarters. However, the high profit margins of the streaming companies and the lower risk makes them a preferred bet compared to the miners. The correction in precious metal prices was due because they had run up sharply in a very short period of time. The outlook of the sector is better than what it was in June. There have been more investments in smaller companies. Pershing Gold (PGLC) has obtained $20 million funding with its director Barry Honig making significant investments. This indicates the faith of the top managers in the prospects of the sector. Silver Wheaton is a good bet for the long term, but the valuations may get a bit stretched if the stock price rises significantly from here.
An article on SA recommends to buy Biozone for its large upside potential and limited downside risk. The author has analyzed the company from different perspectives based on an interview with Brian Keller. He himself has taken a position in the stock. He considers it to be undervalued considering the potential of the QuSomes drug delivery technology and the prospects of the contract manufacturing business. The technology is expected to allow BioZone to reformulate and sell certain FDA approved drugs at a reduced cost, which can potentially help BioZone capture a large percentage of these drug markets. QuSomes are less expensive, easier to make and more versatile. For injectable drugs, the Qusomes help in drug circulation for a longer period in the bloodstream, resulting in efficacy at lower doses. This reduces the side effects also. On the other hand, the phospholipid-based liposomes are unstable, expensive, and difficult to formulate. One of the first prescription applications being tried by Biozone is Voriconazole, which is a first-line therapy for systemic fungal infections. However, it needs to go through the required trials and approvals. The processes may take 2 years and cost the company around $3 million. The other drug is docetaxel (for cancer), which again is highly insoluble. Both these drugs put together have an addressable market of more than $3 billion. The ultimate pipeline of the company could approach 20 new products. Importantly, the company may come with these drugs at a 20%-30% discount and still be very profitable. The contracting business may also become profitable next year due to the recent agreement with MusclePharm. The revenues are expected to be around $20 million in 2014. The article mentions several other factors in support of an investment in Biozone, but also mentions some risk factors for which the article needs to be read in totality.
Some of the bigger names in social media are beginning to realize the importance of native ads. The concepts like banner blindness are being understood better, and there has been an increased preference for native ads compared to the traditional online display ads. The change has started recently, and has a lot of potential for growth over the next few years. Consequently, some analysts have expressed positive sentiments about the prospects of IZEA. Companies like Facebook (FB), Twitter and LinkedIn (LNKD) have sponsored feeds and updates, and native ads are likely to contribute more to their revenue and growth over the long term. Being a pioneer in this business, IZEA has gained valuable experience and insights over the last several years. This obviously puts it an advantageous position compared to other companies which have just started to adapt to the changing face of online advertising. An article had recently mentioned that advertisers may prefer marketplaces like IZEA compared to the social media platforms. Importantly, the current valuations of IZEA are cheap if one factors the potential of the market and the fact that IZEA is getting close to achieving profitability. The Q2 results gave an indication to that effect. A few more good quarters may confirm that the management is continuing its focus on cost control. The company has obtained $2.5 million funding recently which may help provide for its working capital needs. Further, there are expectations from the launch of the Native Ad Exchange. That may help increase the revenues and net margins quickly. The price to sales ratio of IZEA is extremely low (0.44). The strategic advisory board of the company has also been strengthened over the past few months. These members could significant value to the strategies of the company so that it can leverage the growth potential efficiently.
The recent purchases by Dr. Frost have added to the optimism about the future of the stock. There was a gap of about 2 months, but the resumption of purchases provides hope that the correction may not go much deeper. However, the risks are still high as the stock has appreciated more than 107% over the last one year. So a period of consolidation / quietness can be expected. There are voices of caution, but they are suppressed if one sees the faith of Dr. Frost. The valuations are being justified based on the innovation pipeline of the company and the aggressive acquisition strategy. Most importantly, the revenue growth has been fantastic. However, the net losses have continued and the accumulated deficit is huge. The ttm revenue is nearly $82 million whereas the market cap is close to $2.92 billion. So the price to sales ratio is north of 35, and the price to book ratio is just below 9.6. The net loss on ttm basis is nearly $49.5 million. Though a lot of positive triggers are possible, it is imperative that the margins improve over the next few quarters. The company seems to be taking the required steps to correct the situation, but the results may take time. It has a licensing agreement with Biozone (BZNE) which gives it rights for use of Biozone's drug delivery technology QuSomes. The technology is expected to help in reduction of production cost of drugs. The short interest in OPKO is abnormally high, and that may lead to some buying pressure in case of positive news flow. In case Dr. Frost gets more aggressive in his purchases, then the upward momentum can resume. So the party has been great, and it may last even longer. But there is no harm in being a bit cautious. One can be with the stock but with an exit strategy in mind.
The analyst opinion about Acacia is diverse. Many are optimistic about the future of the stock, and the consensus price target of around $28 reflects that. Zacks has upgraded it from underperform to neutral rating with a price target of $23.50. Analysts at Standpoint Research initiated coverage recently, and have put a buy rating with a PT of $33. Barclays Capital reduced the target from $28 to $23. JPMorgan Chase reduced the target from $40 to $34, but they have an overweight rating for the stock. There have been articles recommending to buy the stock mainly because of the potential of the business, and Acacia's approach & business model. The last two quarters have surely made the analysts a bit cautious, and it has now become crucial that the next few quarters are better than estimates. For starters, the earnings next month need to be better than estimates. The expectations are lower as the company was unable to meet the expectations from the last two earnings. In the third quarter last year the revenues were $34.94 million while the net loss was $6.62 million. However, Acacia has the potential to make a comeback and deliver great numbers. Over the long term, the growth is even more probable because of the growth in the market. IPR monetizing is big business, and companies are looking for alternative, less costly routes to achieve optimal value for their IPRs. Some companies like Spherix (SPEX) have even changed their business model to pursue patent monetizing strategies. Spherix has filed a few claims against big companies recently. The short interest in Acacia is around 8% (as on Sep 13), but the days required to cover are around 14.5. So any positive trigger can increase the demand for the stock suddenly. Hopefully the upcoming earnings will be that trigger.