VPHM - Sector: Healthcare---Industry: Biotechnology & Drugs

[David Randolph]

Thanks for posting Citigroup's conference slides all at once la-onda Today I don't have time to listen to the conference's webcast, I'll probably do it for tomorrow's update.

Unfortunately the conference didn't have a positive impact on VPHM shares, as the stock went down 1.83% on the day. It's all short term noise.

I'll keep on holding VPHM.

[yukiii]

The problem with VPHM is
Shares Short   9,538,700
Short % of Float   13.81 %
Shares Short - Prior   7,038,100

Short position keeps going up no reason for them to cover.

[Dracull]

I'm neither optimistic neither pessimist, but that H&S figure doesn't look too good, if it breaks the shoulder, I'm turning my position to short.

[David Randolph]

Well, good luck shorts, my guess is you're gonna need it

People are pessimistic about the possibility of generic competition for Vancocin, but the patent expired in 1996 and 11 years after there's still no one else making a similar drug. The stock is trading at 13.8 times 2007 EPS, and it retains all the potential of a biotechnology company.

However, I do see the potential for an head & shoulders top in the chart. The 200 days SMA stands at $14.13 now, I expect that to provide support and perhaps be the low point of this move.

I'll keep holding VPHM.

[la-onda]

additional info:
VPHM: Short Interest UP 1.1% to 9.6M in May 2007
Friday , May 25, 2007 01:12ET

According to new short interest data from NASDAQ, short interest for Viropharma, Incorporated (NasdaqNM: VPHM) INCREASED 1.1% to 9,646,955 shares for the month ended mid-May, 2007.

SYMBOL             APRIL             MAY          CHANGE       %CHANGE  DAYS/COVER
--------   -------------   -------------   -------------  ------------  ----------
VPHM           9,538,746       9,646,955        +108,209        +1.13%           8

Based on VPHM's 20-day average daily share volume of 1,337,920, it would require approximately 8 day(s) of buying to cover this short interest.

[David Randolph]

additional info:
VPHM: Short Interest UP 1.1% to 9.6M in May 2007
Friday , May 25, 2007 01:12ET

According to new short interest data from NASDAQ, short interest for Viropharma, Incorporated (NasdaqNM: VPHM) INCREASED 1.1% to 9,646,955 shares for the month ended mid-May, 2007.

SYMBOL             APRIL             MAY          CHANGE       %CHANGE  DAYS/COVER
--------   -------------   -------------   -------------  ------------  ----------
VPHM           9,538,746       9,646,955        +108,209        +1.13%           8

Based on VPHM's 20-day average daily share volume of 1,337,920, it would require approximately 8 day(s) of buying to cover this short interest.

Yeah, shorts are always expecting for a generic competitor to Vancocin, but so far, niente. One can look at VPHM's future both ways:

1) The optimistic way, which views VPHM using the cash they've been earning with Vancocin to build a valuable pipeline of new drugs that will hit the market in 2009 and will make the company's profitability grow a lot;
2) The pessimistic way, which views generic competition for Vancocin around the corner and VPHM's sales and profits going down in the near future.

I must say that I don't know what the future holds. Probably I know less than what other market participants know about VPHM, because I have troubles when valuing biotechnology stocks (I don't know enough, the sector is too specific). Exceptionally I'll let the market tell me what to do, instead of my own analysis.

In technical terms the stock is now at a critical point. The way I see the chart below, if VPHM breaks down below $13.82, the bears have won the battle. I'll be humble and take my loss if that happens.

The trading plan for VPHM is:

HOLD VPHM, unless the stock is set to close below $13.82.

[rickjust]

hi,
good idea, as good as the fundamentals may be you can't ignore the huge head and shoulders pattern and the 200ma looming . if it closes below that then it is over for now.
max

[Terliso]

Yup, I agree.... you got to protect capital...

For VPHM, it's really bearish right now. It broke the 13 EMA again in the weekly chart. It might go down and re-test the lower trendline and that's where we should look for safer entry point.

[buddjas1]

In technical terms the stock is now at a critical point. The way I see the chart below, if VPHM breaks down below $13.82, the bears have won the battle. I'll be humble and take my loss if that happens.

I am so happy to have the old David back; making good money mangement decisions and paying attention to what the market is telling you. 

[David Randolph]

hi,
good idea, as good as the fundamentals may be you can't ignore the huge head and shoulders pattern and the 200ma looming . if it closes below that then it is over for now.
max

The problem with biotechs and technical analysis is that everything may change overnight due to some news. If medical tests go well or the FDA suddenly approves a drug stocks can sky rocket 50 or 100% in one single day, who cares about H&S or trendlines in that case?

Yup, I agree.... you got to protect capital...

For VPHM, it's really bearish right now. It broke the 13 EMA again in the weekly chart. It might go down and re-test the lower trendline and that's where we should look for safer entry point.

Thanks for your technical view Terliso.

I am so happy to have the old David back; making good money mangement decisions and paying attention to what the market is telling you.

You mean you're happy to have the old weak hand David back? I'm not. I wish I knew more about VPHM and biotechnology in general.

This is one of the longest threads in www.3stocksonfire.org, with hundreds of bull and bear arguments on VPHM. But the stock has been stuck in a range since 2007 began.

Technically I would like to see it closing back above $14.72, which was a prior short term support, now resistance. I, like Terliso, feel the stock may dive a good chunk more if it breaks down below the ascending trendline I have on my chart and the 200 days SMA, currently at $14.19.

I would like to have some new and very positive fundamental development to take VPHM decisively higher. But I can only hope at this stage. I'm not feeling comfortable holding VPHM, but I don't feel like selling it right away either. One thing I know: VPHM will be the last biotechnology company I'll ever buy.

For now the trading plan for VPHM will remain: HOLD, unless the stock is set to close below $13.82.

[David Randolph]

VPHM closed just 2 cents above the $14.72 short term resistance level, I hope that's enough for market players to start pushing it higher. The way I read the chart, it should breakout above the short term descending trendline, today at $15.10, to be decisively bullish. If that happens I'll be comfortable enough to take out of the trading plan the protective stop.

As it is now the trading plan remains: HOLD VPHM, unless the stock is set to close below $13.82, which is a key support level.

[wxmang]

I guess VPHM is waiting for the 200 Moving Average just like SILC seemed to be waiting for the 50 MA.

[David Randolph]

I guess VPHM is waiting for the 200 Moving Average just like SILC seemed to be waiting for the 50 MA.

Yes, perhaps that's the case wxmang. The 200 days simple moving average is standing at $14.25 today. It would be nice if the stock were to touch it on the early morning trading and then rebound and close the day in the green.

I feel I've been too short term oriented regarding VPHM, my hands are weak, because I don't understand the business very well. Anyway, I know VPHM better than any other biotechnology company. I know it is a very profitable company, but that profitability is always in danger because generic competition for Vancocin can arise. I know that the company has a strong pipeline of new drugs that appeal to me, especially that hepatitis C treatment and the common cold drug joint venture. Maribavir seems to be closer to fruition, but I don't know very well for what it will be used and what's the size of its potential market. I also don't know what competitor's have or are doing in the same field.

In the end, I find biotech stocks very hard to analyze and I don't think they're worth it.

But for now I'll keep the trading plan of holding VPHM, unless the stock is set to close below $13.82.

[la-onda]

Briefing.com quotation (no link available):
......
Thomas Weisel notes that with continued uncertainty on the timing of potential generic competition representing a significant overhang on Viropharma (VPHM 14.49) shares, they conducted a sensitivity analysis to determine the impact of one or more generic oral vancomycin entrants on future Vancocin sales. Even in an absolute worst case scenario, where Vancocin sales went to zero as early as 2008, the firm believes the pipeline alone supports a $12-13 stock, representing minimal downside from current levels. They think significant upside, however, could come from a number of near-term event... ....

have a nice weekend
Oliver
(holding long and strong; I believe  )

[David Randolph]

Thomas Weisel notes that with continued uncertainty on the timing of potential generic competition representing a significant overhang on Viropharma (VPHM 14.49) shares, they conducted a sensitivity analysis to determine the impact of one or more generic oral vancomycin entrants on future Vancocin sales. Even in an absolute worst case scenario, where Vancocin sales went to zero as early as 2008, the firm believes the pipeline alone supports a $12-13 stock, representing minimal downside from current levels. They think significant upside, however, could come from a number of near-term event...

"Pipeline alone supports $12-$13 stock", this is very interesting la-onda, I wonder how they've conducted the analysis to get to this conclusion. The claim itself helps to strengthen ones hands in VPHM, even more so if we knew the details of the analysis.

Technically the stock is right at support, and should start to rise now. I would like to see VPHM closing above the descending trendline on the chart below, tomorrow at $14.93, to get more confident about VPHM, and take out the protective stop that I have.

For now the trading plan remains: HOLD VPHM, unless it is set to close below $13.82.