Trends, Charts and Exclusive Opinion
Three SmallCaps that Have and Must Change the Status Quo
UTSI: Could Benefit from the Recent FCC Broadband Initiative
HALO: Milestone Payment from Baxter Offsets Weak Quarter
OCLR: Telecom Switch Provider Doubles Capacity in Primary Product
First up this morning is UTStarcom Inc., (UTSI) http://www.utstar.com/ currently trading in the $2.31 range on a 3-Month average daily trading volume of a half million shares. UTSI was trading in the 75 cent range a year ago and ascended beyond $2.25 by June 09. An impressive climb. UTSI settled back down to the $1.75 level where it stayed through the summer. In Sept the stock moved back up to the $2.25 range (spiking past $2.50) and with the exception of two 25 cent dips has stayed between $2 and $2.50 since Dec 09. UTSI has a 52-week high of $2.54 set on 09-17-09 with current trailing twelve month revenues of $386+ million. I covered this stock 6 weeks ago with a ‘Watch Closely’ for a three month period.
I thought that once the Company had the Beijing Deals taken care of the value could increase. But earlier this month, as it continues restructuring to focus on IP-based technology, UTSI turned in a Q4 report with a loss $39 million, or -31 cents per share. That compared to a loss of $81 million, or -65 per share in the year-ago period. So UTSI is getting healthier, but at a slower pace than an investor would hope. This is a good company with its troubles behind it one would hope.
The float of 109+ million shares still has too many short-sellers in it (12.3% as of 02-26-10) so the stock is remains a near-term ‘Watch Closely’ consideration for me. UTSI makes and sells an integrated suite of wireless and wireline access network and switching systems that enable customers to rapidly deploy revenue-generating access services using their existing infrastructure, while providing a migration path to cost-efficient, end-to-end IP networks. UTSI is involved heavily in broadband and could benefit from the recent FCC insistence that all Americans have access to broadband.
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Next up this morning is Halozyme Therapeutics Inc., (HALO) http://www.halozyme.com/ currently trading in the $8 range on a 3-Month average daily trading volume of a half million shares. HALO was trading between $5 and $6 a year ago and in May began a rally that took it to $8 in June of 09. HALO fell back down to $6 but set up a floor for 3-Months between $7 and $7.50. HALO fell at the end of Oct to $6 and through the end of 09 vacillated between $5.75 and $6. In late-Feb 2010 and early-March, HALO shot up to the $7 range and through March it has steadily risen to its current level. HALO has a 52-week high of $8.24 set on 03-19-10. HALO is a bio-pharma company that engages in the development and commercialization of products targeting the extracellular matrix for the endocrinology, oncology, dermatology, and drug delivery markets.
HALO also has it shares of short-sellers (7.5%) in its public float of 74+ million shares and is coming off a weaker quarter. But the saving grace in HALO is that it has partners. In mid-March management noted it trimmed its fourth-quarter loss with help from a large payment from its partner Baxter International and Swiss drug maker Roche. HALO last quarter lost $12.7 million, or 14 cents per share vs. a loss of $16.8 million, or 21 cents per share, in the same quarter a year before. But, revenue more than doubled to $6.4 million from $3.1 million. Good News. The latest quarter’s results included $5.8 million in revenue from Baxter and Roche, mainly for a milestone payment from Roche for clinical trials of cancer drug Herceptin SC. A small portion came from Baxter following the approval of the hydration drug Hylenex, which Baxter licensed from Halozyme. HALO is a near-term ‘Watch Closely’ consideration for me. Bigger revenues are the reason though a little less dependence on its partners wouldn't hurt.
Finally this morning is Oclaro, Inc., (OCLR) http://www.oclaro.com/ currently trading in the $2.61 range on 1.5 million shares daily. A year ago OCLR was trading under 50 cents. OCLR found its way to 75 cents through the summer of 09. OCLR then staged a classic, textbook rally upward to its current range. OCLR has a 52-week high of $2.69 set on 03-16-10. OCLR is a short-term ‘Buy’ consideration for me as well. I think this stock is undervalued.
At this price –yes I know it’s near its high- coupled with $286 million in current trailing month revenues of $286+ million and its new WSS switching capacity output, I believe its sales will rise. By employing 50 GHz, WSS customers are able to double the switching capacity of their networking systems in a flexible and cost effective manner. “We are seeing an increased demand for 50 GHz spacing WSS products to support higher capacity optical networking systems,” said Dr. Krishna Bala, EVP of OCLR’s WSS Division. OCLR has a global footprint with cutting-edge chip fabrication facilities in the U.K., Switzerland and Italy, and in Tucson, AZ.
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