Searching for an arrival at the unknown offering price has begun. This should take a week, although in my opinion the majority of the downward move has already occurred.
Something I just saw:
Oil Companies Near Bankruptcy
By Adam Hayes | July 28, 2015
Oil Companies Next at Risk for Bankruptcy
The renewed bear market in oil is likely to take more casualties in the coming weeks and months. Investment bank Goldman Sachs Group Inc (GS) issued a report earlier this year ranking the relative financial strength of oil companies exposed to low oil prices. The findings are reproduced in the table below from their report:
COMPANIES IN THIS ARTICLE
GS 206.24 +1.22 (+0.60%)
AREX 4.26 +0.08 (+1.79%)
XCO 0.67 +0.11 (+19.64%)
GDP 17693.30 −10.40 (−0.06%)
HK 1.01 +0.14 (+16.09%)
MHR 1.08 +0.11 (+11.15%)
MPO 0.52 0.00 (−0.69%)
REXX 2.43 +0.18 (+8.00%)
SD 0.58 +0.05 (+9.48%)
SFY 0.74 +0.02 (+2.99%
Let's take a quick look at the stock performance of these companies most at risk since this report was issued in January:
1. Approach Resources (AREX) has seen its stock price tumble more than 33% year-to-date.
2. Exco Resources (XCO) shares are down 74%.
3. Goodrich Petroleum (GDP) is down over 80%.
4. Halcon Resources (HK) has lost 50% of its market capitalization.
5. Magnum Hunter's (MHR) stock price is down almost 70% since Jan. 1.
6. Midstates Petroleum (MPO) has lost 65% of its value.
7. Rex Energy (REXX) is down nearly 56%.
8. Sabine Oil & Gas has gone bankrupt.
9. SandRidge Energy (SD) trades more than 70% lower than at the beginning of the year.
10. Swift Energy (SFY) is down more than 80% year-to-date.
There is a high probability that these nine American oil companies left standing will be the next to fall.
The climb higher is set to begin after this non-event and I predict an immediate 20% jump of the stock price up into the mid $6's, promoted by rational thinkers. Considering the significant short position I estimate that this move will take place in only one or two trading days.
Investors accepted the inevitability of a subsequent shelf offering upon a favorable shareholder vote for the company to have a Reverse Split, which should come as no surprise to anyone with an ounce of sense. Frankly, I am surprised that it took this long since the Reverse Split for the company to make this announcement. It takes millions of dollars for a biotechnology company to bring a product to market and microcap companies are always strapped for cash during their attempt to evolve into a financially successful and surviving larger biotechnology corporation.
Now the offer will come in 10% lower than the current price and at a discount to attract profit minded risk rewarded investors. There will be retracement, stabilization, closure and then a continuation of a climb of the stock price to higher valuations, which will all happen in due time based upon the schedule. This will probably take two weeks to be resolved, while the stock price consolidates, down, sideways and up.
Based upon the situation I think ZGNX will reach $21.00 a share again in mid-August, about two or three weeks from now.
DVAX had a 1:10 Reverse Split on November 10, 2014 at $15.90 and is now $29.38.
Dynavax (Nasdaq: DVAX) $29.93. Dynavax announced the pricing of a previously announced underwritten public offering of 4,545,455 shares of its common stock, offered at a price to the public of $27.50 per share. The gross proceeds to Dynavax from this offering are expected to be approximately $125 million, before deducting the underwriting discount and other estimated offering expenses payable by Dynavax.
Very safe to Short two weeks ago at $13.44 with the Reverse Split, now at $21.00 and along the way to $40.00 a share, as long as you are not using your own money.
It is time to buy.
Stay Long, my friends.
There are winners and losers
BUZZ-Zogenix Inc: Brean Capital raises PT
10:55 AM ET, 07/15/2015 - Reuters
** Drug developer's shares up 12.5 pct at $19.89
** Stock rises as much as 15 pct to year-high of $20.32
** Brean Capital raises PT to $28 from $20, saying company's experimental drug for Dravet syndrome, a severe form of epilepsy, was potentially more efficacious than competing compound from GW Pharmaceuticals Plc
** Brean analyst also raises probability of drug succeeding in late-stage studies to 80 pct from 70 pct
** Zogenix said on Tuesday it would push back late-stage trials of drug by about 3 months to enroll more patients
** Of 6 brokerages covering stock, 5 have "buy" or higher rating and 1 has "hold"; median PT is $22
8:11 AM ET, 07/15/2015
Brean Capital analyst Difei Yang reiterated a Buy rating and boosted his price target on Zogenix, Inc. (NASDAQ: ZGNX) to $28.00 (from $20.00), saying investors are finally beginning to appreciate ZX008. Yang commented, "Zogenix shares have shown strength during the days leading up to yesterday's KOL investor breakfast day. We believe ZX008 has finally begun to be appreciated by investors. As we have said before, we believe ZX008 for Dravet syndrome is potentially a more efficacious drug than the competing compound from GW Pharma. Based on the detailed discussion from yesterday's KOL investor meeting, we revisited the assumptions used in the calculations for our TP and made two positive revisions. This leads us to increase our TP from $20 to $28."
July 15, 2015 8:37 AM EDT
In a research report issued this morning, Brean Capital analyst Difei Yang maintained a Buy rating on shares of Zogenix, Inc. (NASDAQ:ZGNX) and raised the price target to $28 (from $20), after the company hosted a KOL meeting yesterday that was well received. That said, Zogenix shares gained more than 30% leading up to yesterday’s meeting.
Yang wrote, “The meeting was divided into three sections: 1) Dr. Joseph Sullivan who is a Director at UCSF Pediatric Epilepsy Center and Associate Professor of Neurology & Pediatrics University of California, San Francisco, gave an overview of the disease state, disease incident and prevalence, symptoms, diagnosis, current treatment options and limitations; 2) Lieven Lagae from Paediatric Neurology University Hospitals KULeuven Belgium gave an in-depth overview of the clinical study he has conducted over many years in treating Dravet patients with low dose fenfluramine; and 3) there was a presentation from management which included an update from recent positive FDA interactions. Management guided for filing an IND by the end of August and re-affirmed earlier guidance to initiate two Phase III trials during Q4, 2015.”
The analyst explained her new price target noting, “We revisited the assumptions we used to derive TP for ZGNX shares and thought some of the assumptions were too conservative, e.g., operating income margin for an orphan disease company like ZGNX. We had used the assumption of 35% which is in line with most of other specialty pharma companies, but lower than that for orphan drug companies, which typically is in the 50% range. In addition, we believe because of the strong long-term clinical data on ZX008 as well as the fact that orphan drugs appear to have better R&D successes due to their highly targeted patient population, there is a lower efficacy bar due to lack of an alternative therapy. We revised our success rate for the pending pivotal trials from 70% to 80%.”
Can you use the word 'annihilated' in a sentence? I bet you can. "The Zogenix Shorts are in the process of being annihilated." It's a beautiful day in the neighborhood.
When the selling pressure is completed the stock will take off and some Pink Slips at Rational Investors will be subsequently issued right before Christmas.