You may want to get an idea from this reseach chart report that predicts the next few months. You do not need to buy it but you can get a glance of the future chart. From HZNP yahoo page select research reports and then select Pechala's Report. There is 2 of them, just click on long term (price $25) and see the chart (small version). Future is in red color and it shows that it will go to $8 and higher in next few month.
t.boone, Hope you only watching and you are not attempting to short to damage your pocket.
We have been here on Nov 29, Dec 2 & 3 before. That was the end of the month rebalancing/buying by some funds. The volume for those 3 days summed to about 4 M. This time, we are almost in the middle of the month and volume over 3 M in one day (it will be over 3 M by close).
Bottom line is either shorts are covering or funds are buying more and shrinking the float. There is no way but to go higher and higher from this point. Now if a good news comes our way then any price below $8 will be attractive.
Upper Bollinger Band is sitting at $7.26. Technical players sold as soon as the price went above it or stayed around it. I think they will come back and buyback their shares at higher prices when the technical becomes ready again or upper and mid BB move higher.
Is it technical push or something else? Mid Bollinger Band is sitting at $6.83 and PPS did not want to cross it down. It didn't since Nov 8.
Volume is a good indicator and in HZ case reveals a few things. Just look at volume and accumulation since the price crossed $4.
It took 25 M trading for price level to go from $4.0 to $4.50, 18 M trading from $4.50 to $6.50 and finally we are trading about 25 M in current level ($6.50 to $7.20). It is time to switch to a higher level which is $7 to $7.60.
That is right, there will be some charges related to Vimovo acquisition, new note fees and also fees for old loan payoff. Although non of them affects HZ cash position from what it was stated ($78 M).
Analysts also ignore those known one charges that HZ will do to get tax benefit.
However, followings are what investors will look for
1- Q4 Revenue
2- Net profit from AZN
3- Cash burn and cash position at the end of the quarter
4- Outlook for Q1
My prediction for above will be
1- Q4 rev : $29 M, any number above $28 M is positive
2- Vimovo net profit : $1 to $4 M, anything above $1 M is positive.
3- Cash Position : $68 to $73 M, I am happy with any number above $70 M.
4- Outlook for Q1 : Revenue of $38 to $45, any number above $40 is positive.
Now, let us guess (estimate) any of above.
Just remind you that POZN investor/traders are looking for a short term gain thru dividend payment. Some traders are riding POZN and probably exit before or on day of the payment.
A low volume stock like POZN may drop significantly when traders hit the exit door.
After all, POZN is a low key stock that is happy with one or two royalties in contrast to HZNP that has expansion goal and strategy.
After all, over 50% of POZN 2014 revenue will come from HZNP. On the other hand, HZNP has to perform for POZN to succeed.
However, HZNP is not relaying on one product. Vimovo will be one of many products that HZNP will commercialize.
That is right.
Although HZNP will be profitable and cash positive in 2014 in contrast to most small pharma companies that have to sell shares for years and burn them to survive, HZNP is up to somthing new, a trend that is going much farther than being just positive cash flow. It is building a business that will progress and expand much faster that many companies in its sector.
In less than 3 years after going public, HZNP has put itself to a position that it will generate cash. Now it is time for HZNP to go to next step and expand thru smart acquisition and addition of other products to utilize its unique system. HZNP shareholder will benefit the most if they ignore current PPS volatilities. As a friend of mine is saying, lets close our eyes and lets forget this dream of volatility. When we open our eyes next year this time, HZNP PPS will be much much higher that what it is traded now.
Sorry to mention that numbers are for year 2014.
The estimates are very close to current analysts prediction.
Sentiment: Strong Buy
Update HZNP net income after adjusting SG&A for new addition of new sales force.
Item ********** Q1 ******* Q2 ******* Q3 ****** Q4 ***
Revenue * * * $44 * * ** $50 * * * * $55 * * * * $60
Cost of good* $8.8 * * * $10.0 * * * $11.0 * * $12.0
SG&A * * * * * $32.0 * * $32.5 * * * $33.0 * * $33.0
R&D * * * * * * $2.1 * * * $2.1 * * * * $2.2 * * * $2.2
Interest * * * * $1.9 * * * $1.9 * * * * $1.9 * * * $1.9
Royalty * * * * $1.2 * * * $1.3 * * * * $1.4 * * * $1.5
Others * * * * $1.2 * * * $1.5 * * ** $1.8 * ** * $1.9
Tax * * * * * * $0.1 * * * $0.1 * * * * $1.2 * * * $1.5
Net * * * * * * ($3.3) * * * $0.1 * * ** $2.5 * * * $6.0
Net Income* ($.05) * * * $0.0 * * ** $.04 * * * $.09
HZ goal is to acquire 1 or 2 more products in 2014 after integration of Vimovo. The company sale strategy is working well and it may attract other small companies for cooperation.
After all, Hz is not done with Pozen and they may do more business if Vimovo launch by Hz is successful.
All above require money and Hz can replace $150 note with another higher one and of course better pricing and terms.
No, price increase and Vimovo rev were not included in Q4 calculations, in addition, individual drug rev increase was not calculated even though it can be done with same formula. However, these are estimates and we better go with average numbers.
One time charges for Q4 may be high but investors should look at Q4 rev and outlook for Q1 2014 since those are the ones that count.
What is pb taking about, some investors may ask.
So Q3 rev was $26.22 m but it included 17% one time benefit. That means actual rev was
$26.22 * 83% = $21.76 m
I have developed an algorithm that can calculate rev based on average month to month increase in rev.
3x + 6xp + 4xp^2
X is last month of a quarter rev, p is percent increment of month to month.
If last month of Q2 was $5.5 m and month to month increment was 15% on average then Q3 rev is calculated as : 3(5.5) + 6(5.5)(.15) + 4(5.5) (.15)(.15) = $21.95 m very close to above number.
I also came up a formula to calculate Q3 last month rev which is $8m.
Now let's calculate rev for Q4:
If month to month increment is 10% and last month of Q3 was $8 m then Q4 rev will be
3(8) + 6(8)(.10) + 4(8)(.10)(.10) = $29.12 m
With 13%, the rev will be $30.78
Vimovo Q4 rev is not included in above calculations.
Trust above formulas since I make my living by writing algorithm for medical equipments.
************** Q1 ******* Q2 ******* Q3 ******* Q4 ***
Revenue * * $43 * * * * $48 * * * * $52 * * * * $57
Cost of rev * $09.0 * * $10.5 * * * $11.5 * * * $12.0
SG&A * * * * $25.5 * * $26.0 * * * $26.5 * * * $27.5
R&D * * * * * $2.3 * * * $2.4 * * * * $2.5 * * * * $2.6
Interest * * * $1.9 * * * $1.9 * * * * $1.9 * * * * $1.9
Royalty * * * $1.2 * * * $1.3 * * * * $1.4 * * * * $1.5
Others * * * $1.5 * * * * $1.7 * * * $1.8 * * * * $2.0
Tax * * * * * 0.30 * * * * $0.90 * * $1.40 * * * $2.4
Net * * * * * $1.3 * * * * $3.30 * * * $5.0 * * * $7.10
Income * * $.02 * * * * $.05 * * * * $.08 * * * * $.11
EPS is based on 66 M shr. share numbers may change and also other events may happen in 2014 like refinancing or another acquisition. After all, TW is a very experienced in this field and he is the one who sold Humira, the drug that has been #1 in the whole world for its revenue.
Total Revenue 26,218 12,254 9,171 6,747
Cost of Revenue 5,313 3,517 4,247 3,931
Gross Profit 20,905 8,737 4,924 2,816
Research Development 2,154 2,833 2,198 4,739
Selling General and Administrative 21,495 21,708 21,270 20,103
Non Recurring - - - -
Others - - - -
Total Operating Expenses - - - -
Operating Income or Loss (2,744) (15,804) (18,544) (22,026)
Income from Continuing Operations
Total Other Income/Expenses Net 1,118 454 (905) 801
Earnings Before Interest And Taxes (1,626) (15,350) (19,449) (21,225)
Interest Expense 3,601 3,442 3,603 3,444
Income Before Tax (5,227) (18,792) (23,052) (24,669)
Income Tax Expense 265 (351) (881) (336)
Minority Interest - - - -
Net Income From Continuing Ops (5,492) (18,441) (22,171) (24,333)
Discontinued Operations - - - -
Extraordinary Items - - - -
Effect Of Accounting Changes - - - -
Other Items - - - -
Net Income (5,492) (18,441) (22,171) (24,333)
Preferred Stock And Other Adjustments - - - -
Net Income Applicable To Common Shares (5,492) (18,441) (22,171) (24,333)
I did some research regarding Horizon rev and income for 2014 and I believe Tim guided very conservatively. I don' t blame him since this is the first time Horizon is guiding for a year and a wise man never wants to guide something that cannot deliver.
Vimovo generated $23 M revenue in Q3 2013 and Pozen received $1.6 M royalty from this amount.
$23 M is 72% higher than its revenue in Q3 2012.
It is not expected same surge in 2014 and even keeping the same level per quarter in 2014 will add significantly to HZ revenue.
I skip Q4 since there will be a few one time charges and based on Hz, the transition SG&A will be between $30 to $40 M. So, the charges (interest and fees for old loan + fees for new note + cap call charge) can run to $37 M. Non-gap loss may be in a single digit since Hz may get up to $5 M net from Vimovo.
I go with predicted of $200 M rev for 2014 while all indications say $220 to $230 M.
SG&A will be higher by $3 to $5 M per quarter.
115 new rep sale will be hired. Basic salary of a rep sale is $50k to $100k and $10k to $40k for commission and bonus. For simplicity, each rep cost is calculated as $104k per year or about $3 M per Q for 115 reps.
SG&A will increase by $3 M originally ($25 M) and can go to $30 as company progresses.
The rev for 2014 will be as follow:
Q1: rev =$14 M from Vimovo, $29 from other drugs, total = $43 M.
SG&A = $25.5 M, cost of sale = $9 M, R&D = $2.3 M, interest = $1.9 M, Royalty = $1.5 M, others =$1.5 M, tax =$.3 M, net income = $0.02 per share.
Q2: rev = $49, income = $0.06
Q3: rev = $53, income = $0.09
Q4: rev = $57, income = $0.12
I did not put the details for all quarters but any one ask I will do. The sum of rev for 2014 ends up to be $200 M and vimovo rev were $14, $18, $20, $22 for 2014 quarters that are much lower than Q3 2013.
Suggestion is welcomed.
HZNP estimates have calculated wrongly by analysts in past few quarters. Last quarter was wrong by 68%.
They are wrong again for Q4 and also next year.
My calculations says HZNP will break even for Q4 and it will be profitable in Q1, 2014.
This situation will continue for a while until either enough volume is built or another big news is around.
The stock has doubled in past 2 months and some investors thinks it is time to cash in. That has been my biggest investing mistake in the past. When I doubled my money in PCYC or a few other stocks, I thought that was good enough. However, I could make over 10 fold if I stayed in PCYC and SLXP. All I needed to see main reason for them to go up in spite of a rough road. Although the market has pushed some stocks to high levels recently with or without any progress in their fundamentals, but this is not the case for HZNP since we are talking about significant fundamental change in the company. This is not a case of “A rising tide lifts all boats”. This is a trend that has been started a while ago but we have been seeing some of the results in past two months. This trend will not stop but continues even stronger in future. This is not the time for me to be satisfied with a single run but I want a home run since I missed so many other home runs.