BetterTrades
(Best) SATS, WX, ANW (Worst) PETD, SKBI, PRXL from Better Trades
August 19, 2009
Investors tried to shake off disappointing news and push stocks higher by the close of the week, but the downward pressure in the markets was too much to overcome. Having posted solid gains throughout the week following upbeat comments from the Federal Reserve, the major indices concluded down more than 1% each on Friday alone.
Top 3 Stocks
SATS – EchoStar Corp. ($14.80 to $19.03) +28.6%
One of the leading stocks during the previous week’s trading was EchoStar Corp. (SATS), a company operating in the digital set-top box business and a fixed satellite services business. EchoStar’s set-top box business designs, develops and distributes products for direct-to-home satellite service providers.
EchoStar shares surged more than 28% over the course of a week, due in large part to the company’s better-than-expected earnings report, which showed profits more than doubled, despite the decline in revenues year-over-year. For the recent period, SATS posted net income of $101.8M, or $1.18 per share, in contrast to the prior year’s 2Q earnings of $47.8M, or $0.53 per share.
The company’s surge in profits came mainly from gains on investments that totaled $110.1M. Good thing for the gains, as EchoStar’s revenues for the quarter plunged nearly 21%, falling from $483.3M to $383.1M year-over-year.
Analysts, on average, were looking for the satellite product provider to post a quarterly loss in earnings of $0.01 per share.
Another boost to the company’s stock was an upgrade from a Citi analyst who raised the recommendation on the stock from “sell” to “buy,” while raising the target price on SATS from $13.50 to $21 per share.
Following the company’s announcement on August 10, the stock surged 30% over the next two trading sessions, before pulling back slightly by the end of the week.
At the start of the new trading week, shares of SATS followed the markets lower, falling nearly 2%, or $0.35, to end the day at $18.68 per share. Over the past year, shares of EchoStar have traded as high as $32.25 and as low as $12.78 per share.
WX – WuXi Pharma Tech Inc. ($10.35 to $12.35) +19.3%
Included in the list of companies that posted solid percentage gains over the past week is WuXi Pharma Tech Inc. (WX) a leading China-based pharmaceutical and biotechnology research and development outsourcing company. Posting gains of nearly 20%, shares of WX were bolstered by the company’s recent quarterly earnings report, which showed profits surging during the period on improved margins and reduced expenses.
For the 2Q, WuXi recorded net earnings of $14.7M, or $0.20 per share (ADS), versus the previous year’s earnings of $8.5M, or $0.12 per share, an increase year-over-year of almost 73%. Helping the cause, operating expenses retreated more than 5% to $13.4M.
Adversely, the company’s overall revenues slipped from $69.1M to $67M, a decrease in net sales of just over 3%. Analysts within the industry were looking for WuXi to book net income of $0.12 per share with overall revenues coming in at $63.7M.
For fiscal 2009, the company is expecting yearly revenues to range between $265M and $275M, while analysts are speculating annual sales to be $267.84M.
With the stock trading in the low $10 range prior to the company’s earnings announcement, shares jumped $2 per share by the end of the week, gaining more than 19%. However, the beginning of the new trading week brought unwanted results, as shares of WX slipped by the closing bell, giving up nearly 5%, or $0.61, to end the August 17 session at $11.74 per share.
During the past 52 week, shares of WX have traded as low as $3.67 and as high as $18.49 per share, with the stock’s low reached back in early March of this year.
ANW – Aegean Marine Petroleum Network Inc. ($18.41 to $21.06) +14.4%
Another company benefiting from a prosperous quarterly report was Aegean Marine Petroleum Network Inc. (ANW), a marine fuel logistics company that physically supplies and markets refined marine fuel and lubricants to ships in port and at sea. In a statement released on August 12, Aegean confirmed that the company’s profits during the 2Q surged on the strength of better profit margins from marine petroleum product sales.
Based in Piraeus, Greece, Aegean stated that net income for the quarter was $16.3M, or $0.38 per share, in sharp contrast to the previous year’s quarterly income of $9.9M, or $0.23 per share, an increase in profits of nearly 65%.
Results were influenced by a $4.2M gain from the sale of vessels. Excluding the sale, ANW would have posted earnings of $12.1M, or $0.28 per share.
Revenues, meanwhile, receded for the period, falling from $741M to $542.6M, a decline in overall sales of almost 27%. If not for a nearly 22% increase in the volume of marine fuel, which amounted to more than 1.5 million metric tons, results could have been worse for the company.
Heading into the second half of the year, Aegean has thus far earned $20.7M, or $0.49 per share, a 19% improvement over last year’s six-month tally of $17.4M, or $0.41 per share.
By the end of the week’s trading, shares of ANW had gained $2.65, posting a solid 14% gain in market value. Nevertheless, with the major indices losing more than 2% each in August 17 session, Aegean’s stock slipped 4.8% by the close, falling $1.01 to end the day at $20.05 per share.
The company’s stock price has ranged as high as $36.00 per share and as low as $7.62 per share over the course of a year.
Worst 3 Stocks
PETD – Petroleum Development Corp. ($17.07 to $13.70) -19.7%
One of the leading percentage losers for the week ending August 14 was Petroleum Development Corp. (PETD), an independent energy company engaged primarily in the development, production and marketing of natural gas and oil. Similar to many other companies that report a poor earnings statement, Petroleum Development announced that during their 2Q, the company posted a loss, albeit smaller than the previous year’s loss.
For the recent period, PETD recorded a net loss of $33.1M, or $2.23 per share, compared to the prior year’s loss of $40.7M, or $2.76 per share, a 19% reduction in losses. The narrower loss was a direct result of the company’s cost cutting measures and a reduction in dire hedging contracts, which only amounted to a loss of $23.3M.
Quarterly revenues advanced however, climbing from $26.2M to $33.6M, an increase of more than 28% year-over-year. analyst, on average, were looking for the oil and natural gas producer to post a quarterly loss of $0.04 per share with total sales coming in at $87.1M.
The company’s stock price continued to plummet following an announcement of a stock offering in which nearly 4 million shares would be sold. In an effort to generate between $50M and $70M in proceeds, shares of PETD slipped more than 22% by the close of the August 11 session.
On top of that, an analyst at RBC Capital Markets downgraded the company’s rating from “outperform” to “market perform,” citing an above-average debt-to-capital ratio well over 40%.
By the conclusion of the trading week, shares of PETD had slipped nearly 20% from the closing price of $17.07 following the end of the August 7 session. With a new trading week afoot, the company’s stock continues to slide in trading, losing $0.82, or 6%, to finish the August 17 session at $12.88 per share.
During the past year, PETD shares have traded as high as $65.74 and as low as $9.39 per share. With Monday’s closing price, PETD shares sit 39% above their yearly low, which was established on March 11 of this year.
SKBI – Skystar Bio Pharmaceutical Co. ($15.44 to $13.40) -13.2%
Added to the list of percentage losers for the week ending August 14 was Skystar Bio Pharmaceutical Co. (SKBI), a China-based company involved in the development, manufacturing, and distribution of vaccines, medicines and other medical and health care products for livestock, poultry and domestic pets. The company witnessed their stock price decline more than 13% leading up to their 2Q earnings announcement.
For the quarter, Skystar posted a net loss of $117K, or $0.06 per share, versus a net loss of $126K, or $0.07 per share a year ago, a 7% improvement year-over-year. Results were affected by the company’s charges related to liabilities on warrants that amounted to $1.5M. Excluding these charges, Skystar would have posted net income of $1.4M, or $0.73 per share.
Revenues for the quarter were calculated at $6.2M, up more than 39% over the previous year’s tally of $4.5M. Gross margin for SKBI advanced from 51.6% to 52.6%, which was aided by higher selling prices.
Weibing Lu, Chairman and CEO at Skystar commented on the company’s results, "Our revenue increase in the second quarter was largely attributable to the utilization of the veterinary medicine facility expansion completed in 2007 and increased sales efforts. We have an established and growing distribution network that services our diverse customer base of more than 1,500 throughout the entire farm producing provinces in China. With more than 350 franchise stores with nationally recognized branding and few direct competitors, we are well positioned as an industry leader."
Despite the relatively positive news from the company’s earnings report, shares of SKBI slipped more than $2 per share by week’s end. Unfortunately, that trend continued into the following week, with the company’s stock falling an additional 4.6%, or $0.61, by the close of the August 17 session at $12.79 per share.
Following the company’s IPO on June 29, 2009, shares of SKBI opened that day’s trading at $22 per share, before slipping to a low point of $18.75 per share. The stock’s price reached a new trading low of $11.11 on July 10.
PRXL – Parexel International Corp. ($14.41 to $12.64) -12.3%
Rounding out the list of those stocks losing market value throughout last week’s trading is Parexel International Corp. (PRXL), one of the largest biopharmaceutical outsourcing organizations in the world, providing a broad range of knowledge-based contract research, medical marketing and consulting services to the worldwide pharmaceutical, biotechnology and medical device industries.
Announcing their quarterly results on August 10, the company revealed that they had booked net income totaling $6.3M, or $0.11 per share, well below the prior year’s 4Q profits of $25M, or $0.43 per share, a steep drop in income of almost 75%. Results were affected by the company’s decline in revenues and accounting charges.
For the period, revenues slipped from $331.9M to $292.4M, a drop in sales of nearly 12%. Parexel’s results also included one-time charges related to accounting charges for the recently acquired ClinPhone business amounting to $0.16 per share.
On average, analysts within the industry were looking for the pharmaceutical service company to post 4Q earnings of $0.27 per share on total revenues of $274.8M.
Josef H. von Rickenbach, Chairman and CEO at Parexel announced, "In addition to the difficult accounting adjustments that we had to make in the fourth quarter in connection with the ClinPhone acquisition, service revenue was negatively impacted by headwinds emanating from the broader economic environment, including the year-over-year negative impact of foreign exchange."
By the end of the fiscal year 2009, PRXL posted net income of $39.3M, or $0.68 per share, compared to 2008 results of $64.6M, or $1.12 per share, a decrease in annual profits of more than 39%. Revenues for the year increased nearly 8% to $1.25B from $1.16B.
Looking ahead to fiscal 2010, Parexel is speculating yearly earnings between $0.85 and $0.95 per share, with revenues ranging from $1.12B to $1.15B. Analysts believe the company should post annual income of $1.06 per share with overall sales coming in at $1.14B.
By the end of last week’s trading, shares of Parexel had fallen more than 12%. At the start of the new week, shares continued their downward trek, falling more than 4%, or $0.52, at $12.12 by the conclusion of the August 17 trading day.
Over the course of a year, shares of PRXL have ranged between $6.11 and $33.40 per share.
2009 Better Trades Article
brought to you by
BRIAN MULLIN
