Posts tagged PFE
Fuck yeah was it on today as the cry of “1400 or Bust!” rang through the trading pits (and if it is Melissa Archer’s bust, well, then Money McBags may have to be rooting with his shorts) like other momentous rallying cries such as “The British are coming,” “Remember the Alamo,” and “Who Let the Dogs Out.” That’s right. despite 2MM people protesting in the streets of Egypt demanding that Mubarak let their people earn dough as Egyptians have grown sick and tired of being poor, sick and tired of seeing food prices rise, and sick and tired of having to root for the Pistons (whoops, that’s Detroit, but Egypt-Detroit, potato-potahto. Actually, it’s probably safer to walk the streets of Cairo than Detroit and with much less hobo smell), the market rallied as if it had downed a case of Four Loko spiked with ample amounts of Red Bull and Charlie Sheen’s urine.
With global unrest now a catalyst for the market to go up in the bizarro ponzeconomy™ in which we live where fundamentals have been trumped by regression analysis on historical time periods that look nothing like today’s period, regularly scheduled government bond purchases inflate paper portfolios more than Timothy Geithner’s ego or Lacy Banghard‘s bra, and crossing one’s fingers and hoping it doesn’t hurt is the leading investment strategy, Money McBags guesses all one can do is buy the dip, buy the rip, and buy everything with more beta than a blue chip. Just be ready to get the fuck out before the tattered curtain is peeled back exposing this run up for the Fed induced manipulation it has really been.
Anyway, other than a sovereign nation with touch points to the global energy supply imploding (though not nearly as important these touch points), macro news was rather quiet today. The ISM’s manufacturing report showed that factory activity in the US rose to 60.8 last month which was up from 58.5 in December and was higher than even the highest analyst guess of 59.5 as analysts thought they were playing by the rules of The Price is Right and thus going over would cause them to lose (though what they would lose other than their credibility Money McBags doesn’t know, and yes that is funny because they have no credibility). Money McBags just loves to point out when shit like this happens because in theory with 78 analysts guessing (which should be a large enough sample size), the actual number should be somewhere within the normal curve of guesses, but this result wasn’t even within a fat-tailed standard deviation of the mean which means (pun intended) that those models are either fucked (and if there will be any model fucking, Money McBags hopes that Marissa Miller will be involved) or the measurement is fucked, or more likely, both. The most interesting part of the data though was that the pricing index went from 72.5 to 81.5 and it’s a good thing that Bernanke said inflation is not a problem, because otherwise Money McBags would be more nervous than if he had gotten mouthy with Julie Schenecker (and yes that is sarcasm).
The only other macro news was that construction spending fell to its lowest level in a decade, and if that doesn’t scream recovery then Money McBags’ name isn’t Money McBags (hmmmm). Construction spend fell by 2.5% which was worse than analyst guesses of a .1% rise, once again outside of the entire range of guesses, and about as healthy for the economy as a cancer sandwich with an extra topping of AIDS and Mickey Rourke’s taint. While every sector was down, the biggest drop came in federal construction which fell 12% as the government moved its funds to more pertinent ventures like producing food stamps and new rims for Joe Biden’s Camaro.
In the market, earnings were mostly positive as UPS delivered a solid Q and beat estimates thanks to package volume rising 1.7% which was the result of business picking up and better use of the Maxtender. EPS was up 44% to $1.08, which beat analyst guesses of $1.05, and full year forecasts for eps were a range of $4.12 to $4.35 which would be ~20% growth, ahead of analyst guesses, and a result of strong orders for the Tila Tequila sex tape to be shipped overnight.
Elsewhere, Pfizer was up 5% after a good Q and an announcement that they will slash their R&D budget in 2012, buyback an additional $5B in shares, and try to produce drugs that treat only patients not using a medicaid discount. And finally, Baidu searched for and found a ginormous quarter as their their profit tripled and their market share in China rose to ~73% as inflation pushes up more than just currency.
In small cap news, everything was up including KITD which closed up ~6% a day after their strange set of acquisitions which Money McBags broke down in great detail yesterday. Speaking of Money McBags’ breakdowns (other than the mental one he is currently having over the death of the only positive thing he had in his life, NSFW muff guessing. He’d say more about this but right now the wound is too fresh and his pole is at half mast as a way to mourn), when he analyzed CRUS’ Q last week, he erroneously said they weren’t supplying chips to the iPad which was just flat out wrong. Shit, it was a fucking douchewad mistake, but Money McBags simply missed the iPad product breakdown a few months ago and he hadn’t gone back through the latest delightful presentation on the CRUS investor page (and note to readers, their presentation is actually a really good introduction to the company for new investors because the CEO has a voice over on all of the slides so you’re not just looking at out of context data, but you are hearing about it as well).
Anyway, if Money McBags read and listened correctly, CRUS currently has 5 custom ICs they sell to Apple so that does damper his bullishness a bit as he thought getting in to the iPad would be a step function up for them (which it likely was, but now we’re still on that step). The important question is whether Malene Espensen will ever return Money McBags’ overtures, but the relevant question is can CRUS get more than 5 ICs in to Apple products to get that next leg of audio growth (perhaps their third leg if you will, after the smartphone and the tablet). Regardless, Money McBasgs thinks CRUS is a company that is working right now because they sell a product to the company that is currently dominating the world (like selling gold chains to MR. T in 1984) so they should continue to have success but they are no longer stupid cheap and need find new areas of growth.
Finally, Money McBags was set to break down NEI’s Q today, but he got busy doing other shit and is now more tired than his dick jokes. He went through their Q, updated his model, and found just the right picture of Danica Thrall, but he simply doesn’t have the time right now to give it the write-up it deserves. He will shoot to have this tomorrow, but the basic story is he thinks there is ~10% downside now and 100% upside but it is 90% likely to just do nothing as it’s not what Money McBags would call a high quality company with any kind of disruptive technology, They are a little do shit services company that is winning bigger deals as they compete on price and they might be about to hit some strong growth which was foreshadowed by the expansion of their manufacturing in to Europe. So nothing about Money McBags’s thesis has changed, but he’ll hopefully get to the details tomorrow. Also, watch for SFLY earnings tomorrow. This company has been rocketing the fuck up and looks to be just cockposterously overvalued. Money McBags has never liked this name but he hasn’t paid much attention to them in a couple of years, so he really has no opinion going in to earnings. His gut tells him they are going to have a big Q (because everything else has) but with the way they are priced, a miss should cause a big sell off, like Pam Anderson‘s career once she turned 35. So the name should be volatile either way and Money McBags is curious to dig in because if they miss, it could be a good short candidate.
5/4/10 Midafternoon Report: Monty Python to rewrite script as somebody expects the Spanish Inquisition
Timberrrrrrrrrrrrrrrrrrrrrrrrrrrrr. The market is trading down as if Europe is going to go bankrupt like John Edward’s morals or like investors think it will give them AIDS (which means Magic Johnson is happily buying today since he can’t be infected again). The news continues to be fears that even with austerity measures and a bailout, Greece is going to be more fucked than Custer at the Battle of Little Bighorn or Houston after the Houston 620. As a result, the dollar is at its one year high against the euro, though to be fair, part of that high is because 90% of dollars have traces of cocaine on them. Adding fear to Greece’s impending doom is worry that the debt contagion is spreading to the other crappy European countries about which no one cares (you hear that Liechtenstein with your alps, tax haven, and policy of neutrality?). Spain is once again worrying the markets as Spanish banks are proving to be weaker than the force carried by W and Z bosons or Tiger Wood’s “sexual addiction” excuse. Apparently two banks in Northern Spain were supposed to merge but that is now some sort of power struggle to see who gets to be in charge of the crappy loans which sounds a bit like Dustin Hoffman and Warren Beatty arguing over who gets the marketing rights to Ishtar. Along with bank issues, the country’s current unemployment rate is over 20% and considering they have like a 15 hour work week, that is fucking shocking. Spanish Prime Minister Jose Luis Rodriguez Gonzalez Ramirez Guerrero Zapatero is shocked by the speculation that his country may be facing worse fiscal problems and claimed his country has “strong solvency” and the possibilty of needing a bailout is “complete madness” before he asked reporters if they’d like to buy an unfinished church and promised he’d make them a deal, even throwing in a Shake Weight for free. The market is scared today with Europe’s debt crisis pulling a Coleman Silk and spooking investors but we were due for some consolidation so as long as you hold names you are comfortable with, don’t panic.
In US macro news, pending home sales rose 5.3% which beat guesses and reached a 5 month high. As always, this increase was driven by tax breaks for new home buyers and cardboard boxes now being included in reported home sales numbers. Also, factory orders jumped 1.3% in March and were up 3.1% when excluding transportation orders which is the biggest surge in 5 years since the great home redecoration bubble of 2005. The US macro news continues to be encouraging but we still need to see unemployment decline until we will start feeling giddier than Amanda Carrier‘s bowflex.
In stock news, everything is down so this could be a buying opportunity for real companies. Unfortunately, SIRI isn’t one of them despite putting up a quarter where they actually earned a $.01 per share profit. SIRI’s business model is more flawed than Amy Winehouse’s face or supply side economics. With the prevalence of iPods, podcasts, internet radio, and Brooklyn Decker (not clear what Brooklyn Decker has to do with this, but she is hot), there is absolutely no reason to pay for radio unless you are a fan of the great Howard Stern and when Stern retires at the end of the year, Sirius will be deader than Larry Craig’s political career. Money McBags would rather be subject to 24 hours of Celine Dion’s music while watching re-runs of Friends and having his anus waxed than go long SIRI. In other news, MRK and PFE both had good quarters as untemployed people still need to stay medicated to stave off depression, anxiety attacks, and the stench from Paris Hilton‘s vagina.
In small cap news, Money McBags is getting absolutely obliterated like Alf Landon in the 1936 election (perhaps he shouldn’t have eaten all of those cats) or Carmella Bing in Sodom 4. CRUS is getting pounded, though it has run up so much that momentum investors are likely just taking profits. This is true of most of Money McBags’ names but he is holding steady as he believes in their stories and they are not overvalued (except for maybe VMW which is a bit overvalued, but whatever). Yesterday Money McBags told all of you to watch NTRI’s Q last night and they are up 20%+ after putting up moderately better numbers than the street was expecting yet giving what Money McBags thinks is pretty good guidance. For the Q, NTRI earned $.15 per share on revenue of $159MM of revenue but they had $8MM of potential one-time marketing expenses so absent those, they would have earned closer to $.28 per share. While revenue was basically flat with last year, new customers were up 11% and new customer revenue was up 14% due to a mix shift back to more expensive products. New customers basically drive this business as they help with reactivation as recency of dropping out plays a big role in getting people to rejoin plus the weak new customer additions from the past two quarters have hurt their regular program revenues. The bad news was that their Walmart/Walgreen’s/Sam’s club retail promotions bombed worse than Michael Richards on Showtime at the Apollo. The roll out of those programs cost them $3MM in marketing expense which won’t be repeated again and was part of the $8MM excess marketing spend. Of course that other $5MM came from higher ad rates so it’s not clear how much of those are really temporary vs. a shift in demand for ads and thus persistently higher rates. The company guided to $1.02-$1.12 eps for the year and $.33-$.36 eps for next Q with moderate topline growth so they are banking on marketing spend going back down to ~29% of sales while their gross margin and op ex improvements maintaining. They are trading at ~20x that with their 20% run up today and are still pretty cheap on an EBITDA basis. They earned ~$70MM EBITDA last year but with their guidance they should slightly exceed that so call it $75MM. With $90MM cash and no debt, they now have an EV of $600MM and thus are <9x EV/EBITDA on 2010 earnings. That’s about inline with peers but pretty cheap for their cash flow business model. The stock is still 33% below its high from the beginning of the year which means they have 50% more to go to get back to where the market thought they should be valued if growth was to come back. The point is, strong growth isn’t quite here yet but they are starting to get trickling sequential growth and adding that to operating improvements gives you a stock with the potential that is now reasonably priced for a static environment. But the thing is, we know there are a ton of fat people in this country so programs like this are always going to be in demand until society stops shunning bulimia. NTRI’s diabetic targeted product is continuing to grow and apparently hiring the once delicious Angie Everhart has spiked up sales to their women’s segment. Money McBags is going to let the shorts cover today but may be buying tomorrow when this thing settles. There is plenty of room to move up while downside seems limited, that said, the stock is near fairly valued if you think their weight loss products will only have moderate growth.