Tag Archives: stocks

Biomeds And Banks In Basing Mode After A Strong Week

Generic drug and biotech firms scored two of the top three gains among industries this past week. Super regional banks, led by BB&T ( BBT ), SunTrust Banks ( STI ), Northern Trust ( NTRS ) and Fifth Third Bancorp ( FITB ), was the other fast-rising group. The biotech group rose 6% for the week. The gain was disproportionately influenced by some thinly-traded names, particularly Amphastar ( AMPH ),  a maker of injectable and inhalable drugs. It surged 16% on the week. Emergent BioSolutions ( EBS ) popped 6% for the week, putting it at a new high and in buy range above a 41.06 buy point in a double-bottom-with-handle base.  Emergent’s bread-and-butter product BioThrax is an anthrax vaccine. Emergent is also planning to spin off its Aptevo Therapeutics subsidiary, which has a prostate cancer treatment in clinical trials, later this year. Analysts project a 3% earnings decline this year, followed by a 73% rebound in 2017. Another potential group leader is IBD 50 stock Medivation ( MDVN ).  Owner of the prostate cancer treatment Xtandi, Medivation shares are up 24% since clearing a 48.87 buy point in April. Investors who opted out of that back-and-forth breakout could look at the chart as a 14-month cup pattern, which puts shares just below a 63.04 handle buy point. Medivation is under uncertain pressure from France’s pharma giant Sanofi ( SNY ), which is reportedly gearing up for a board battle after Medivation declined the company’s $9.3 billion takeover offer last month. Analysts consensus plots a 31% EPS gain this year, rising 63% in 2017.  Sales are expected to slip 1% in 2016, rebounding to a 26% gain next year. One other biotech worth mentioning is Incyte ( INCY ). The Delaware-based specialist in blood cancer treatments is up since April 1, but needs more work on building the right side of a potential new base.  Its Relative Strength Rating is sickly and the stock remains deep below its 40-week moving average. But analysts project a 222% revenue gain this year, partly due to its acquisition of the European operations of Ariad Pharmaceuticals, set to close in June, followed by sharp rebound to profitability next year. Among generic drug makers, Allergan ( AGN ) and Akorn ( AKRX ) show some of the more telling chart action in the group. Allergan rose almost 3%, to just below its 10-week moving average, a line that has acted as a ceiling for the stock since early January. Akorn retook its 10-week line the previous week, then quickly advanced to push through resistance at its 40-week line. Allergan has no possible buy point in sight, and Akorn needs time if its current consolidation is to become a base. The RS ratings for both stocks are dismal, but their fundamentals remain sound, and an upturn in institutional investor for the stocks would count as a positive for the market. Beyond the drug trade, banks also posted a strong week, buoyed by rising indications that the Federal Reserve is leaning toward a rate hike in June.  Investment banks also took strength from JPMorgan Chase ’s ( JPM ) announcement on Tuesday that it would lift its dividend by 9%. SunTrust, Northern Trust and Fifth Third have all technically formed cup-with-handle patterns. SunTrust and Northern Trust show the strongest Relative Strength Ratings, and the handles of their base patterns have formed above 10-week support. One other factor to note: All four banks show Accumulation/Distribution Ratings of B- or better, suggesting they are seeing strong buying interest from institutional investors.

Amazon Looks Primed To Disrupt Wal-Mart, Target, CVS, Walgreens

A major expansion by Amazon.com ( AMZN ) into private-label goods, which could come this month, elevates its ability to further challenge legacy retailers across the board. Cowen analyst John Blackledge estimates Amazon will be the No. 2 player in the $425 billion consumable market, excluding food and beverage, surpassing  Walgreens Boots Alliance ( WBA ), CVS Health ( CVS ) and Target ( TGT ) but still lagging well behind market leader Wal-Mart ( WMT ). He defines consumables as four segments: personal care products, household products, baby products and pet products. Blackledge also estimates Amazon will be a top-10 player in the $785 billion food and beverage grocery market by 2019. “We are encouraged by Amazon’s growing footprint in this category, which we see as ripe for potential disruption, given younger demos increasingly purchasing grocery items via digital channels,” Blackledge wrote. The leader in the food and beverage category is Wal-Mart, followed by Kroger ( KR ), Albertsons/Safeway and Costco Wholesale ( COST ). Last week, the Wall Street Journal  cited people familiar with the matter as saying Amazon is set in the coming weeks to roll out new lines of private-label brands that will include its first broad push into perishable foods. According to the Private Label Manufacturers Association, sales of private-label store brands in the U.S. topped $118 billion in 2015, with supermarkets and drug chains accounting for over $70 billion of the total. In the grocery and consumables market, Blackledge says, Amazon’s growth has come at the expense of Wal-Mart, Target. Walgreens and CVS. Amazon’s key competitive advantage is its multiplatform approach with Amazon Prime, which includes same-day delivery for many goods, “all of which should lead to rising number of consumers skipping the trip to the local supercenter, drug store or grocery market,” he wrote. Amazon has sold private-label products since 2009, primarily under the AmazonBasics brand, though that effort has concentrated largely on consumer electronics. Amazon stock rose 0.6% to 702.80 in the stock market today . Amazon stock hit an all-time high of 722.45 on May 12. It carries a strong IBD Composite Rating of 94, putting it among the top 6% of all stocks on key metrics such as revenue growth. Walgreens climbed 1.3% but CVS fell 1.5%. Target climbed 2.4%. Wal-Mart advanced 1%, hitting a nine-month high intraday, after spiking nearly 10% Thursday on strong earnings and same-store sales.

Qunar’s Airline Battle Won’t Slug No. 1 Chinese Agency Ctrip: ITG

Qunar ‘s ( QUNR ) ongoing dispute with China’s airlines won’t hurt China’s No. 1 online travel agent Ctrip.com ( CTRP ), which is expected to report March-quarter travel sales that doubled vs. last year, ITG analyst Henry Guo said. Ctrip and Qunar stocks split on the stock market today , with shares of Ctrip 1.7%, as Qunar fell 1.5%. IBD’s 11-company Leisure-Travel Booking industry group was up a fraction. For Q1, Guo expects Ctrip to report 4.19 billion to 4.29 billion yuan ($640 million to $650 million), topping the consensus view for 4.16 billion yuan. Ctrip hasn’t yet set a date for its Q1 earnings release. That outperformance would follow a months-long battle with flagship carrier Air China — along with some other local airlines including Hainan Airlines and its Hong Kong Airlines unit, as well as China Eastern’s Shanghai Airlines — over fees charged by booking agents such as Qunar. Ctrip acquired a stake in Qunar after the two formed a partnership last year. In the wake of airlines’ refusal to list on Qunar.com, the site now directs users to Ctrip.com or to airlines’ official websites, Guo wrote in a research note. “We believe this should help drive Ctrip’s organic transportation revenue growth and partially offset Qunar’s air-ticketing weakness,” he wrote. Hotel occupancy in China fell to 53.1% in Q1 from 53.6% in the prior quarter, Guo said, but revenue per available room surged 2.2% year over year, “suggesting improved monetization for the whole hotel industry.” At the same time, he says  InterContinental Hotels Group ( IHG ) and Hilton Worldwide ( HLT ) reported 8.3% and 8% year-over-year growth for their Chinese operations, respectively, and Marriott International ( MAR ) saw revenue per available room in Asia rise 6.8% vs. last year. Guo expects Ctrip to report a 76% to 86% jump in accommodations sales vs. the year-earlier quarter, topping the company’s guidance for 70%-80% growth. He sees Ctrip’s travel segment more than doubling revenue. Packaged tours — one of Ctrip’s growth engines — has benefited from outbound travel to high-demand destinations like Japan, South Korea and Southeast Asia, Guo wrote. Relaxed visa requirements have helped fuel outbound travel. He expects 52% year-over-year growth in this segment.