Small cap biotech stock Array Biopharma (NASDAQ: ARRY), medical device stock ICU Medical, Incorporated (NASDAQ: ICUI) and pharmaceutical stock Taro Pharmaceutical Industries Ltd. (NYSE: TARO) are all scheduled to report earnings after the market closes on Monday. That means traders and investors with a long term time horizon alike have two more trading days to open or close a position in these small cap biotech, medical device and pharmaceutical stocks. So what’s the best trading and investing strategy for these small caps? Here is a quick overview of all three:
Array Biopharma (NASDAQ: ARRY) Recently Raised $70.9 Million in a Stock Offering
Array Biopharma is becoming a late-stage development biopharmaceutical company focused on the discovery, development and commercialization of targeted small molecule drugs to treat patients afflicted with cancer. Specifically, Array Biopharma has two wholly-owned programs, ARRY-614 and ARRY-520, and three partnered programs, selumetinib (with AstraZeneca), MEK162 (with Novartis) and danoprevir (with InterMune/Roche) that have the potential to begin Phase 3 or pivotal trials by the end of 2013. A quick look at Array Biopharma’s newsfeed reveals the company is a regular presenter at investment and health care conferences while in December, the company sold 18,000,000 shares of its common stock for $3.65 per share plus an overallotment of 2,700,000 shares. The total net proceeds for Array Biopharma came to $70.9 million. Investors should be aware that Array Biopharma has reported revenues of $85,135k (fiscal 2012), $71,901k (fiscal 2011) and $53,880k (fiscal 2010) for the past three fiscal years ending June 29th along with net losses of $23,581k (fiscal 2012), $56,324k (fiscal 2011) and $77,631k (fiscal 2010). So it looks like Array Biopharma has enough funds for at least this year and investors should pay attention to any news regarding trials. On Thursday, Array Biopharma rose 0.27% to $3.77 (ARRY has a 52 week trading range of $2.55 to $6.17 a share) for a market cap of $359.66 million plus the stock is up 58.4% over the past year and down 40.8% over the past five years.
ICU Medical, Incorporated (NASDAQ: ICUI) Both Raised and Lowered Its Guidance for the Year
ICU Medical develops, manufactures and sells innovative medical technologies such as custom I.V. systems, closed delivery systems for hazardous drugs, needleless I.V. connectors, catheters and cardiac monitoring systems used in vascular therapy, oncology and critical care applications. On Monday, ICU Medical announced the voluntarily discontinuation of one of its products over FDA concerns about its safety along with sharply decreasing US sales volumes caused by customers switching to the company's newer technologies. However, the news had little impact on ICU Medical’s share price. Back in October, ICU Medical reported a 6% third quarter revenue increase to $81.4 million along with a 32% net income increase to $12.2 million. ICU Medical also raised its earnings guidance for the full year, but cut its revenue estimates due to the weaker euro and softer results from the critical care business. That means investors may not face any negative surprises on Monday. On Thursday, ICU Medical rose 0.03% to $60.45 (ICUI has a 52 week trading range of $44.91 to $64.25 a share) for a market cap of $881.75 million plus the stock is up 30% over the past year and up 68.1% over the past five years.
Taro Pharmaceutical Industries Ltd. (NYSE: TARO) Is Being Bought Out in an Increasingly Messy Merger Deal
Israel based Taro Pharmaceutical Industries is a multinational, science-based pharmaceutical company focused on the discovery, development, manufacturing and marketing of prescription and over-the-counter (OTC) pharmaceutical products focused on pediatric creams and ointments, liquids, capsules and tablets, mainly in the dermatological and topical, cardiovascular, neuropsychiatric and anti-inflammatory therapeutic categories. Taro Pharmaceutical Industries also develops and manufactures active pharmaceutical ingredients (APIs) that are used in its finished dosage form products. Back in July, Taro Pharmaceutical’s board rejected a buyout offer for $24.50 per share (a 26% premium) from Sun Pharmaceutical Industries Ltd. for being too low. Apparently, the two companies have been discussing an acquisition on and off since mid-2007. In August, Sun Pharmaceutical Industries offered $39.50 per share – which was accepted by the board but not by minority shareholders. Then a December extraordinary general meeting where minority shareholders would be allowed to vote on the deal was postponed. Investors should note that Sun Pharmaceutical Industries already owns 66% of Taro’s shares and controls 77.5% of voting rights while Taro contributes about a third of Sun’ earnings. There is also apparently a minority shareholder accusing Taro Pharmaceutical Industries’ management of having under-reported net sales – meaning there is plenty of risk for investors and traders alike should the deal not go through. On Thursday, Taro Pharmaceutical Industries rose 0.50% to $46.63 (TARO has a 52 week trading range of $30.50 to $50.00 a share) for a market cap of $2.07 billion.
The Bottom Line. Investors and traders alike probably should not expect any surprises with the earnings reports of small cap biotech Array Biopharma and medical device stock ICU Medical, but there could still be plenty of fireworks and risk with pharma stock Taro Pharmaceutical Industries Ltd. long after its earnings report is released.