Shorts have always liked to dance with Phil Frost
Apr 18, 2017 1:08:52 GMT
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Post by miamianne67 on Apr 18, 2017 1:08:52 GMT
Give The Shorts Some Aspirin. Here Comes A Headache
by Gene G Marcial
April 19, 1993, 12:00 AM EDT
Generic-drug maker Ivax is one stock the shorts feel mighty triumphant about. They started shorting it when the stock ran as high as 43 a share in early 1992--and then watched it fall, in a jagged pattern, all the way down to 22 7/8 on Apr. 6. Judging by the huge short interest building up again in the stock, the bears are betting that Ivax will continue to dive.
They could be wrong this time. "The shorts should take their winnings while they're way ahead," says one money manager, who is convinced Ivax will finally produce the earnings "breakout" expected in 1992's fourth quarter.
The stock has two things going for it, says this pro. Sometime soon, the Street will realize that Ivax' "super-generics" are starting to produce "impressive" sales, he says. And when the Clinton health-care plan is unveiled, Ivax should attract more attention as investors start to see it as a major player in low-cost drugs. Generics, says this pro, "will be the cornerstone of national efforts to reduce health-care costs, and Ivax is in an excellent position to benefit from that."
About 70% of Ivax revenues come from generic drugs and only 15% from brand-name drugs. But Ivax' stock hasn't benefited the way other generic drugmakers' stocks have. Copley Pharmaceuticals and Teva Pharmaceutical Industries, for example, have been trading up, close to or at their highs.
NEW NICHE. Clinton's health-care package is expected to mandate low-cost drugs as well as widen medical coverage to include the 35 million Americans currently without health benefits. Already generics have boosted their share of the drug market, from 9% in 1980 to more than 20% last year.
"Although we are producing more generics than any other in the business, Ivax has been wrongly lumped together with the major drug companies," laments Dr. Phillip Frost, Ivax chairman and CEO. One reason, he believes, is that analysts who cover Ivax are longtime followers of the giant pharmaceuticals. Frost has taken advantage of the stock's drop by raising his stake to 20% from less than 19%.
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One drug expected to pay off big this year is verapamil, which is taken once a day to treat hypertension. In the four months that it was on the market last year, verapamil had sales totaling $38 million. For 1993, Ivax expects verapamil sales to come in between $75 million and $100 million. "At its current rate, the drug will hit $100 million, barring the entry of new competition," says Rick Pfenniger Jr., Ivax' chief legal counsel.
Thanks to verapamil, a future earnings stream is now more certain, says analyst Sharon Dorsey Wagoner at Argus Research, who calls the new product Ivax' "first major supergeneric drug." If it does well, analysts may raise estimates of $1.10 to $1.20 a share in 1993 and $1.40 to $1.80 in 1994. Ivax earned 65 in 1992.
by Gene G Marcial
April 19, 1993, 12:00 AM EDT
Generic-drug maker Ivax is one stock the shorts feel mighty triumphant about. They started shorting it when the stock ran as high as 43 a share in early 1992--and then watched it fall, in a jagged pattern, all the way down to 22 7/8 on Apr. 6. Judging by the huge short interest building up again in the stock, the bears are betting that Ivax will continue to dive.
They could be wrong this time. "The shorts should take their winnings while they're way ahead," says one money manager, who is convinced Ivax will finally produce the earnings "breakout" expected in 1992's fourth quarter.
The stock has two things going for it, says this pro. Sometime soon, the Street will realize that Ivax' "super-generics" are starting to produce "impressive" sales, he says. And when the Clinton health-care plan is unveiled, Ivax should attract more attention as investors start to see it as a major player in low-cost drugs. Generics, says this pro, "will be the cornerstone of national efforts to reduce health-care costs, and Ivax is in an excellent position to benefit from that."
About 70% of Ivax revenues come from generic drugs and only 15% from brand-name drugs. But Ivax' stock hasn't benefited the way other generic drugmakers' stocks have. Copley Pharmaceuticals and Teva Pharmaceutical Industries, for example, have been trading up, close to or at their highs.
NEW NICHE. Clinton's health-care package is expected to mandate low-cost drugs as well as widen medical coverage to include the 35 million Americans currently without health benefits. Already generics have boosted their share of the drug market, from 9% in 1980 to more than 20% last year.
"Although we are producing more generics than any other in the business, Ivax has been wrongly lumped together with the major drug companies," laments Dr. Phillip Frost, Ivax chairman and CEO. One reason, he believes, is that analysts who cover Ivax are longtime followers of the giant pharmaceuticals. Frost has taken advantage of the stock's drop by raising his stake to 20% from less than 19%.
The most important business stories of the day.
Get Bloomberg's daily newsletter.
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One drug expected to pay off big this year is verapamil, which is taken once a day to treat hypertension. In the four months that it was on the market last year, verapamil had sales totaling $38 million. For 1993, Ivax expects verapamil sales to come in between $75 million and $100 million. "At its current rate, the drug will hit $100 million, barring the entry of new competition," says Rick Pfenniger Jr., Ivax' chief legal counsel.
Thanks to verapamil, a future earnings stream is now more certain, says analyst Sharon Dorsey Wagoner at Argus Research, who calls the new product Ivax' "first major supergeneric drug." If it does well, analysts may raise estimates of $1.10 to $1.20 a share in 1993 and $1.40 to $1.80 in 1994. Ivax earned 65 in 1992.
