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With overseas markets up today, the U.S. markets followed in kind and SmallCap Cirrus Logic (CRUS) and S&P SmallCap 600 companies SurModics (SRDX) and Epicor (EPIC) posted significant gains amidst a bullish sentiment on Wall Street.
In a global signal the world economic recovery is well under way, the Australian central bank raised interest rates today and the Institute for Supply Management said its service sector index, which tracks more than 80% of U.S. economic activity, rose in September from August; for the first time in over a year. Bullish traders are also seeing friendly takeovers grow, like today's acquisition of ICT Group (ICTG) by Sykes Enterprises (SYKE) for $263 million, and that too has inspired investors to buy into the autumn rally.
Gaining 25.09% ($6.09) this morning is S&P SmallCap 600 company Surmodics Inc., (SRDX) http://www.surmodics.com/ currently trading on the NASDAQ in the $30.36 range. SRDX has a new market cap of $528 million. SRDX has a 3-Month average daily trading volume of 103,363 shares and it quadrupled that volume two hours into today's session topping 419,511 shares traded.
SRDX management said today the Company has signed an exclusive license and development agreement with Roche's Genentech (DNA) wholly-owned subsidiary to use SRDX's proprietary biodegradable microparticles drug delivery system to develop and commercialize a sustained drug delivery formulation of the drug Lucentis in ophthalmology applications and treatments.
The Genentech License
SRDX will receive an up-front licensing fee of $3.5 million and SRDX could be eligible to receive up to approximately $200 million in fees and milestone payments in the event of the successful development and commercialization of multiple products. SRDX will also receive undisclosed royalties on product sales. "We believe that partnering with Genentech, among the world's largest and most prominent biotechnology companies and an established market leader in ophthalmology, serves to validate our critically enabling technologies," said Bruce Barclay, president and CEO of SRDX.
SRDX operates in three segments: Drug Delivery, Hydrophilic and Other, and In Vitro. SRDX also has collaboration agreements with Donaldson Company for the development of synthetic ECM cell culture products and with Merck for development and commercialization of products incorporating the SRDX I-vation platform.
At $30.36, SRDX is pennies below its 52-week high of $$30.75 set on 10-06-08 and is far above its 52-week low of $15.96 set on 03-09-09. At $30.36, SRDX is ahead of both its 50-day and 200-day moving averages. SRDX has trailing twelve month revenues of $125 million and a trailing twelve month diluted EPS of $1.93. SRDX is widely held by institutions. Its shares out versus float ratio is close enough to parity not to raise any red flags about stability.
Gaining 12.09% ($0.62) this morning is Cirrus Logic Inc., (CRUS) http://www.cirrus.com/ which is currently trading in the $5.75 range on the NASDAQ. CRUS has a new market cap of $375 million. CRUS has a 3-Month average daily trading volume of 636,129 shares and it easily doubled that two hours into the session.
At the close of the market yesterday, CRUS management raised its fiscal Q2 revenue estimate, citing stronger-than-expected demand for audio products.
Guidance
CRUS now expects to report sales of $55.7 million in the three-month period that ended Sept. 26. Previously, CRUS had been forecasting $48 million to $52 million in Q2 2010 revenue. Analysts on the street have been looking for sales of $49 million. In the year-ago quarter, CRUS revenues were $53 million. CRUS expects gross margin to be at the upper range of the previous guidance estimate of 50% to 52%.
CRUS will hold its quarterly conference call to discuss Q2 2010 on Tuesday, Oct. 20, 2009, at 10:30 a.m. EDT. CRUS will release the financial results at approximately 8:00 a.m. EDT on the same day.
CRUS develops high-precision analog and mixed-signal integrated circuits which include analog-to-digital converters, digital-to-analog converters, and digital amplifiers for consumer electronics applications, like DVD players and recorders, home theater systems, set-top boxes, MP3 players, gaming devices, sound cards, and digital televisions.
At $5.75, CRUS is below its 52-week high of $6.22 set on 09-16-09 is above its 52-week low of $2.16 set on 01-21-09. At $5.75, CRUS is ahead of both its 50-day and 200-day moving averages. CRUS has trailing twelve month revenues of $168 million and a trailing twelve month diluted EPS of $0.02. CRUS is widely held by institutions. Its shares out versus float ratio (65m/60m) is near-parity.
Gaining 11.74% ($0.76) this morning is S&P SmallCap 600 company Epicor Software Corporation (EPIC) http://www.epicor.com/ currently trading in the $7.10 range on the NASDAQ. EPIC has a new market cap of $433 million. EPIC has a 3-Month average daily trading volume of 243,852 shares and it handily topped that by mid-session.
EPIC management announced today that they had amended the EPIC existing Credit Facility agreement to provide the Company with more operating flexibility in light of changing economic conditions over the past 18 months.
... a little guidance ...
EPIC said that it also expects its EPS for Q3 2009, ended September 30, to exceed the range it previously provided, and that total Q3 revenues will be within the range previously provided by the Company on July 28, when management said they expected Q3 09 total revenues of $96 to $100 million and earnings per share of $0.09 to $0.10.
The New EPIC Credit Facility
On the credit issue, EPIC EVP and CFO Michael Pietrini said in part, "...due to the dramatic changes in the economic climate since we first negotiated the Facility terms more than 18 months ago, the previous covenants, particularly the fixed charge covenant, were becoming a potential impediment for the Company and were being factored into many of the business decisions we made."
Major changes to the credit revision included: Elimination of the total leverage and fixed charge coverage financial covenants in favor of minimum profitability and liquidity covenants, which are significantly more favorable for the Company; Reduction of the size of the credit facility to $100 million; Shortening the maturity date of the revolving credit facility by five months to September 30, 2012 and Increasing the applicable interest rate margin by 2.0% to 2.25% from current levels.
EPIC solutions enable companies to focus on their customers, suppliers, partners, and employees through enterprise-wide management of resources and information. The company's products include back office applications for production management, supply chain management, retail management, and financial accounting, as well as front office customer relationship management and service management.
At $7.10, EPIC is below its 52-week high of $8.24 set on 10-06-08 and is above its 52-week low of $2.33 set on 02-23-09. At $7.10, EPIC is ahead of both its 50-day and 200-day moving averages. EPIC has trailing twelve month revenues of $456 million and a trailing twelve month diluted EPS of $0.01. EPIC is widely held by institutions. Its shares out versus float ratio (61m/49m) is close enough to parity not to cause any concern over stability.
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