Monday, May 19, 2014

Applied Materials, Dendreon, and Hansen Medical

Just a few notes today on three of the companies I own or follow.

Applied Materials (AMAT) had a bang-up quarter, reporting on May 15. Management has been predicting market share gain because of new tools for the semiconductor industry, some based on Applied's deeper abilities in materials processing science. Revenue was $2.35 billion, up 7% sequentially from $2.19 billion and 19% from $1.97 billion in the year-earlier quarter. GAAP EPS (diluted earnings per share) were $0.21, flat sequentially from $0.21 and up from negative $0.11 year-earlier. Non-GAAP EPS was $0.28.

Applied is on two separate cycles: the semiconductor process upgrade cycle (for instance, right now the transition from 28 nm processes to 20 nm processes) and the end-device demand cycle, which tends to follow global economic ups and downs. Long-term investors have to learn to ignore the cyclical nature, or use it to buy AMAT when it is cheap. As I write it is at $20.19, cheap if EPS keeps growing. Pays a divident of $0.10 per quarter too, working out to just under 2% per year at the current price. Applied is waiting for regulatory approval to combine with Tokyo Electron. If the merger goes well they could crush the competition. For more see my Applied Materials Q2 2014 notes.

Dendreon (DNDN) continues to make progress despite its woes. Early Phase II data in its study for its vaccine for urothelial cancer is encouraging. But unless the final Phase II data is extremely strong, we still have a large, expensive, slow Phase III trial to attempt to gain regulatory approval. In the meantime everything depends on how management reduces the cash burn. Some data due to be presented later this month may also encourage more patients and doctors to prescribe Provenge; any increase in revenue would be helpful. There is a lot of short interest in this stock as shorts bet that Provenge sales will plunge (something they've been predicting for 2 years) and the company will go bankrupt before European sales of Dendreon ramp up in Q1 2015. For more see my Dendreon Q1 2014 notes.

Hansen Medical's (HNSN) stock price has been on a downward tear since it hit  52-week high of $2.89 on February 11. It sank to $1.10 on May 12 and now has had a dead-cat bounce, probably short covering, back up to $1.31 as I speak. Hansen Medical has two catheter-cased robots, one for electrophysiology and one for vascular surgery, that are much praised but seldom sold. With a market cap of $146 million and Q1 sales of $3.7 million, you can see why it is a highly speculative, venture-capital type of bet to make. Still, there is always next quarter; they claim the sales pipeline is strong, it is just hard to get hospitals to actually commit to new capital equipment purchases. I think the questioning of Intuitive Surgical's robots has not helped. For more see my Hansen Medical Q2 2014 notes.

I own all three stocks (but not Intuitive Surgical). I reserver the right to buy more, or to sell my shares, at any time. I am an investor and financial journalist.

Tuesday, May 13, 2014

Agenus, Inovio, Dendreon, Dot Hill, Microchip, Hansen analyst conference notes

Top of the list, published at Seeking Alpha:

Agenus Platforms Provide Many Shots on Commercialization Goal

My notes on recent quarter results and analyst conferences:



Dot Hill


Hansen Medical


I had been working on the Agenus article for some time. I came up with a value of AGEN stock much higher than the current value, but I believe I was fair about it. If anything, I held back because I was a bit shocked at how valuable the company should be. If I were a billionaire I would buy the whole thing at the current market capitalization, if I could. Of course an attempt like that would send the price soaring.

I own some of all the above stocks except Regeneron. I really should pick up some REGN, despite the high P/E ratio, but my cash only goes so far.

I bought some more Mylan (MYL) stock on May 9, but now I have enough of it. Can't say what Mylan will do in the short run, but in the long run they look to do great.

Now that earnings season is slowing down, I hope to write more analysis, and I hope Seeking Alpha will continue to publish my longer pieces.

Friday, May 2, 2014

Celgene, Seagate, TTM, SGI and Vertex Pharmaceuticals

Another busy week. Here's my work that you can find for free online:

Celgene in 2015: $200 per share [at Seeking Alpha on April 29, 2014] which was partly based on my summary of the Celgene Q1 analyst call.

Other notes on quarter reports/analyst calls this week:

Seagate is muddling along, with a good (low) P/E ratio, good dividends, and ability to sustain or even grow the dividends as long as the world needs data storage.

TTM Technologies, the PCB (printed circuit board) manufacturer had a seasonally down Q1 but believes the second half of the year will be strong. The analysis here is that as TTMI generates cash and pays down the debt it used to acquire its Chinese factories, earnings will grow.

SGI continues to struggle. The stock price is too high to warrant my buying in (I closed my position
in January); a turn around is already priced in. But I just don't share SGI management's belief that they will do better in the second half.

Vertex Pharmaceuticals is in disaster mode, but Wall Street is still treating it like it is already a Gilead or Celgene. Vertex is doing great work helping Cystic Fibrosis patients, but with its Hepatitis C franchise dead, I think it is way overpriced. Way, way over priced. Ridiculously overpriced. I say that as someone who frequently argues that drug pipelines are undervalued by investors.

Next week: Microchip, Hansen Medical, Regeneron, Dendreon and Dot Hill report.