Companies featured in this edition of the newsletter: ACCP, DKAM, FMTI, ICLK, IMUC, ITUI, MNDL, OMCM, PHC
The markets came roaring back this week on the strength of earnings reports from several notable companies and some surprisingly positive economic data which provided investors with all the reason that they needed to jump headlong back into equities. The Dow posted an impressive 7.3% gain on the week to close at 8743, up 597 points on the week, cutting its yearly loss to 0.4%. The Nasdaq also managed to post sizable gains, ending the week at 1756, up 7.4% on the week and 19.6% on the year while the S&P 500 and Russell 2000 finished the week up 7.0% and 8.0%, bringing their yearly gains to 4.1% and 4.0%.
Earnings were sharply in focus this week and did not disappoint; nearly every company of note reported earnings well above consensus estimates to the delight of investors. The stage was set on Monday when Goldman Sachs received an upgrade from bearish analyst Meredith Whitney who raised her outlook and commented that she felt that it was possible for financials to rally by as much as 15% in the short run. Goldman’s report did not disappoint, as the company shattered estimates and raised the bar for other financial stocks reporting later in the week, including JP Morgan which also managed to handily outperform forecasts. By Friday, financials were up 9.4% on the week. Intel’s drubbing of estimates later in the week added more fuel to the bullish fire as it helped to allay fears that the recession would hinder tech growth.
Economic developments on the week were largely positive as well, headlined by the largest ever drop in continuing jobless claims, which fell by 642,000 to 6.273 million. Inflation reports came in a bit higher than expectations with both the CPI and PPI showing the effects of higher energy prices, but the core consumer inflation figures, which exclude energy and food costs were in line with acceptable levels. Positive news from housing markets in the form of stronger than expected housing starts and building permits served to further soothe the minds of anxious investors as they look forward to next week and more earnings reports.
What should investors look for this week? Earnings season will be in full swing and is expected to command investors’ full attention. On Monday morning, look for reports from Halliburton (NYSE: HAL) and Johnson Controls (NYSE: JCI), followed that afternoon by Boston Scientific (NYSE: BSX) and Texas Instruments (NYSE: TI). Things pick up considerably on Tuesday morning with Blackrock (NYSE: BLK), Caterpillar (NYSE: CAT), Coca Cola (NYSE: KO), Continental Air (NYSE: CAL), DuPont (NYSE: DD), Lockheed Martin (NYSE: LMT), Merck (NYSE: MRK), Schering-Plough (NYSE: SGP), Southwest Air (NYSE: LUV), UAL Corp. (NASDAQ: UAUA), United Technologies (NYSE: UTX), and United Health (NYSE: UNH). After the bell on Tuesday, expect reports from Advanced Micro (NYSE: AMD), Apple (NASDAQ: AAPL), Starbucks (NASDAQ: SBUX), and Yahoo (NASDAQ: YHOO). Wells Fargo (NYSE: WFC) reports Wednesday morning, followed that afternoon by Boeing (NYSE: BA), Delta Airlines (NYSE: DAL), Eli Lilly (NYSE: LLY), Morgan Stanley (NYSE: MS), PepsiCo (NYSE: PEP), Pfizer (NYSE: PFE) and Qualcomm (NASDAQ: QCOM). On Thursday before the bell look for reports from 3M (NYSE: MMM), Bristol-Myers (NYSE: BMY), Ford Motor (NYSE: F), Kimberly-Clark (NYSE: KMB), McDonalds (NYSE: MCD), Northrop Grumman (NYSE: NOC), Phillip Morris (NYSE: PM), Radioshack (NYSE:RSH), Raytheon (NYSE: RTN), UPS (NYSE:UPS), US Air (NYSE: LCC), and Wyeth (NYSE: WYE), with Amazon.com (NASDAQ: AMZN), American Express (NYSE: AXP) and Microsoft (NASDAQ: MSFT) reporting after the close. The week wraps up on Friday morning with Ingersoll-Rand (NYSE: IR) and LM Ericcson (NASDAQ: ERIC).
Economic reports will be few and far between but look for Leading Indicators for June due out at 10:00am Monday morning. On Wednesday, expect Weekly Crude Inventories at 10:30am, followed on Thursday by Weekly Initial Jobless Claims at 8:30am and Existing Home Sales for June at 10:00am. The week finishes up on Friday with Revised Michigan Sentiment Index for July at 9:55am.
There are no notable conferences scheduled for the week due to earnings reports, but keep an eye on developments from Chairman Bernanke’s testimony on monetary policy which is expected on Tuesday and Wednesday, as investors will surely look for signs that the Fed is beginning to slow its implementation of quantitative easing measures.
Volume Alert: Shares of behavioral healthcare services provider Pioneer Behavioral Health (AMEX: PHC), surged 30% on almost twice average volume last week, following news the week prior that the company has expanded capacity at its Capstone Behavioral Facility in Detroit, Michigan, in response to increased demand for its services in the region, and anticipation that the company could receive CMS certification for its Seven Hills Behavioral facility in Nevada. PHC previously said that it believed it was “close” to receiving certification at the Nevada facility and has demonstrated strong growth in demand for its services in Michigan markets which has been coupled with strong performance within the healthcare sector in the past few weeks. Shares gained forty one cents on the week to close at $1.74.
Volume Alert: Shares of Drinks Americas Holdings (OTCBB: DKAM), a company that develops, owns, markets, and nationally distributes alcoholic and non-alcoholic premium beverages associated with renowned iconic celebrities, jumped 8% on over two times average volume before retreating last week, following the announcement that it has launched Kid Rock American Badass Beer at Comerica Park in Detroit Michigan during Kid Rock concert dates on July 18th and 19th. DKAM has planned roll outs in Michigan markets immediately following the concert dates, with the beer being available initially in kegs and 12 oz. and 22 oz. bottles shortly thereafter. A newly formed sales team will begin selecting distributors and filling orders in the Michigan market, where initial interest in the beer has been high. In other news last week, the company announced that the Olifant Vodka brand, supported by headline sponsorship of the Blazed and Confused Tour featuring Snoop Dog and Slightly Stoopid, is driving year over year sales growth in current markets, and that sales have expanded into additional concert venue markets where Olifant was not previously sold including California, Utah, Idaho, Washington, Oregon, New Mexico and Nevada. The company believes that sales at the distributor level will increase by close to 40% thanks to the increased brand awareness raised by the Tour. Shares ended the week up 2% to close at $0.1325.
Forbes Medi-Tech Inc. (NASDAQ: FMTI), a life sciences company focused on evidence-based nutritional solutions, announced last week that the Nasdaq has extended the suspension of its bid price minimum listing requirement, extending the company’s compliance deadline to January 4, 2010. In order to regain compliance, Forbes must achieve a minimum closing bid of $1 or greater for ten consecutive trading days before the deadline. The company is currently working to retain its listing on the Toronto Stock Exchange (TSX) as well, and has until August 12, 2009 to regain compliance with the TSX’s minimum $3 million market capitalization threshold. Given current trends and trading patterns, the company has said that it does not expect to regain compliance with the TSX’s requirements by the deadline stated, but plans to seek listing on another Canadian exchange should its shares be delisted following the August deadline. Shares lost two cents on the week to close at $0.30.
i2Telecom (OTCBB: ITUI), a leading developer of award-winning patented and innovative high-quality mobile applications and services, announced last week that its MyGlobalTalk application now allows users in 31 countries to save on international calls, marking a significant expansion from the first generation application which only allowed users within the US to access the MyGlobalTalk network. The application is now available in overseas markets via local access numbers which allow users in the 31 nations to have their international phone calls routed through the MyGlobalTalk network at significant cost savings versus traditional international calling plans. The app is also available on Smartphones and works wherever mobile service is available, providing high-quality service without the need for a Wi-Fi connection with no contracts, connection fees or call minimums. Shares closed the week at $0.0475.
Volume Alert: Shares of internet advertiser interCLICK, Inc. (OTCBB: ICLK), surged 14% on almost twice average volume last week, as the company again raised guidance for its preliminary second quarter revenue for the period ended June 30, 2009. ICLK now expects revenue to exceed $10.5 million, an increase of over 124% compared to the year-earlier period and 25% sequentially, raising guidance from its previous forecast for quarterly revenue to exceed $9.5 million versus $4.7 million in the corresponding year ago period. The company previously increased its 2009 full-year revenue forecast on June 4th, for revenue to exceed $40 million, which would represent an increase of at least 80% compared to 2008 revenue of $22.4 million. ICLK attributes its strong performance to its proprietary behavioral targeting system which has allowed the company to deliver significant return on investment to its advertising clients. In other news last week, ICLK announced that it has appointed Steven D. Rubin to its Advisory Board. Mr. Rubin is a member of The Frost Group, LLC, a successful private investment firm based in Miami that recently purchased a large position in ICLK. Mr. Rubin has extensive experience across a breadth of industries and will add a great deal of perspective and experience to the Board. Shares gained twenty cents on the week to close at $1.60.
ImmunoCellular Therapeutics (OTCBB: IMUC), a clinical-stage company that is developing immune based therapies for the treatment of brain and other cancers, announced last week that it has retained the services of the Torrey Pines Institute for Molecular Studies in San Diego, CA, to evaluate the immunogenicity of peptides to target cancer stem cells (CSCs) relating to the company’s lead product candidate ICT-121. The evaluation will be conducted by Dr. Clemencia Pinilla, a specialist in immune response mechanisms and their role in the prevention and cause of human disease with over 100 publications and multiple patents to her credit. IMUC expects that this is the beginning of a collaborative relationship which will serve to increase the efficacy of their existing portfolio and could lead to development of more commercially viable vaccines in the future. Shares gained ten cents on the week to close at $0.40.
Mandalay Media (OTCBB: MNDL), the owner of new media distribution and content companies, reported results for its fourth fiscal quarter and fiscal year ended March 31, 2009 last week. MNDL managed to report its first quarter of positive adjusted EBITDA, posting $0.9 million, an improvement of approximately $1 million sequentially, while revenue for the quarter was approximately $9.9 million. Revenue for the fiscal year ended March 31, 2009 was $31.3 million with an EBITDA loss of approximately $2.0 million. The company also provided guidance for FY ’10, where it expects to generate revenues in excess of $40 million with EBITDA of $3.5 million as a result of expected increases in M&A activities, expansion into new markets in Europe, North America and Latin America, and plans to expand its product offerings to capitalize on the growing Smartphone market. Shares remained unchanged at $0.55 on the week.
On the Wires: Access Pharmaceuticals, Inc. (OTCBB: ACCP), an emerging biopharmaceutical company that develops and commercializes propriety products for the treatment and supportive care of cancer patients, announced last week that it has been invited to present at the Jessup & Lamont 2009 Growth Stock & National Sales Conference to be held at the Waldorf Astoria Boca Beach Club on July 30th, 2009 in Boca Raton, Florida. Shares gained twenty six cents on the week to close at $2.10.
SPECIAL SITUATION:
OmniComm Systems (OTCBB: OMCM) $0.20
Over the course of the past few months, we have profiled a number of companies operating in industries that have been overlooked by investors in the wake of the global economic slowdown that are now poised to resume growth as markets continue to right themselves. The biotech industry has been one of the sectors hardest hit by the slowdown, where companies with insatiable demand for investment capital necessary to push product portfolios through the capital intensive FDA approval process were denied funding as a result of the capital market freeze, making it all but impossible to acquire the financing necessary to push product portfolios through the FDA approval process and onto commercialization. With the beginning of recovery, these companies have begun to be able to satisfy their demands for fresh capital resulting in the sector beginning to resume growth, despite being largely overlooked by investors searching for value in the broader market. OmniComm is a company that is poised to capitalize on the renewed growth spurred by access to capital markets which has allowed many biotechs to resume their clinical programs by facilitating and streamlining management of the massive amounts of data necessary to promote clinical programs through the FDA process. They are an eClinical software and services company dedicated to helping the world’s pharmaceutical, biotechnology, contract research (CROs), and medical device organizations to maximize the value of their clinical research investments through the use of innovative and progressive technologies.
Despite sounding complex, OMCM’s business model is fairly straightforward; they provide customer driven Internet data management solutions to companies conducting potentially life altering clinical trial research across the globe. The company itself is one of the fastest growing entities in the Electronic Data Capture (EDC) and Clinical Trial Management Systems (CTMS) markets, ranking in the top 150 fastest revenue growth technology companies in North America during the last five years. At the center of OMCM’s success is its TrialMaster web based software platform which allows clinical trial sponsors and investigative sites to easily and securely collect, validate, transmit, and analyze clinical study data including patient histories, patient dosing, adverse events and other clinical trial related information via an intuitive user interface. TrialMaster eliminates the need for endless stacks of documents and makes them available instantly to agencies all across the globe, greatly reducing the costs and time constraints associated with clinical processes. Since its inception in 1997, OMCM has facilitated the enrollment of over 10,000 patients in North America, Asia, Europe, Australia, Africa, India and South America, with successful implementation of TrialMaster in over 40 countries and close to 300 clinical trials from Phase I through IV, with a number of customers having received FDA approval using the TrialMaster system.
In addition to its strong technology platform and superior customer service offering that enables facilitation of all phases of clinical development, OMCM has also recently acquired the EDC business of eResearch Technology, a key competitor in the space which should significantly enhance the company’s bottom line by providing OMCM with 44 new clients. eResearch’s EDC business generated $5.9 million in FY ’08 with revenues of $1.4 million in the first quarter of this year, and OMCM expects that the acquisition will further facilitate growth and increase their position as a leader in the EDC business. Despite their strong business model and recent acquisition activity, and like many companies operating in the space, OMCM has recently seen its shares punished as a result of the difficult capital markets which have severely hampered clinical activities for all but the most well capitalized companies. Prior to the slowdown, OMCM posted back to back to back record quarters, but that impressive growth was stunted with the significant decreases in clinical activities resulting from the slowdown. With renewed access to capital markets resulting in a resurgence of clinical activity, OMCM seems well positioned to reap the benefits as companies again recommence going through the FDA approval process, which could see the company resume its growth.