Zynerba lower following disappointing results

Zynerba says target blood levels in ZYN001 THC-Prodrug patch study not achieved

Zynerba lower following disappointing results, Stockwinners
Zynerba lower following disappointing results, Stockwinners

Zynerba Pharmaceuticals (ZYNE) announced top line results from a Phase 1 clinical program studying ZYN001, the Company’s patent-protected, pro-drug of tetrahydrocannabinol delivered via a transdermal patch, in healthy volunteers.

The program assessed the safety and pharmacokinetics in single and multiple doses of several formulations of ZYN001.

The top line results of this Phase 1 study indicate that target blood levels of 5 to 15 ng/ml THC were not achieved.

ZYN001 was very well tolerated with minimal skin erythema.

There were no serious adverse events or discontinuations for subjects receiving ZYN001.

As a result of these data, the Company will focus its development efforts and investments on the ZYN002 Fragile X syndrome, developmental and epileptic encephalopathy and adult refractory epilepsy programs.

The company expects that this change will extend its cash runway into the second half of 2019.

This Phase 1 study was a single and multiple dose, placebo-controlled first-in-man study to assess the safety and pharmacokinetics of ZYN001 administered as a transdermal patch to healthy adult subjects.

Several formulations and patch wear times ranging from 24 hours to 14 days were assessed in in 60 healthy subjects who were randomized to ZYN001 or placebo.

ZYNE closed at $9.61, it last traded at $7.60.


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Tariffs kill jobs

European Union raises tariffs on Harley-Davidson to 31% from 6%

Harley-Davidson to move productions overseas to avoid tariffs

Harley-Davidson moves some productions out of U.S., Stockwinners
Harley-Davidson moves some productions out of U.S., Stockwinners

The European Union has enacted tariffs on various U.S.-manufactured products, including Harley-Davidson motorcycles (HOG).

These tariffs, which became effective June 22, 2018, were imposed in response to the tariffs the U.S. imposed on steel and aluminum exported from the EU to the U.S. Consequently, EU tariffs on Harley-Davidson motorcycles exported from the U.S. have increased from 6% to 31%.

Harley-Davidson expects these tariffs will result in an incremental cost of approximately $2,200 per average motorcycle exported from the U.S. to the EU.

Harley-Davidson believes the tremendous cost increase, if passed onto its dealers and retail customers, would have an immediate and lasting detrimental impact to its business in the region, reducing customer access to Harley-Davidson products and negatively impacting the sustainability of its dealers’ businesses.

Therefore, Harley-Davidson will not raise its manufacturer’s suggested retail prices or wholesale prices to its dealers to cover the costs of the retaliatory tariffs. In the near-term, the company will bear the significant impact resulting from these tariffs, and the company estimates the incremental cost for the remainder of 2018 to be approximately $30M-$45M.

On a full-year basis, the company estimates the aggregate annual impact due to the EU tariffs to be approximately $90M-$100M.

To address the substantial cost of this tariff burden long-term, Harley-Davidson will be implementing a plan to shift production of motorcycles for EU destinations from the U.S. to its international facilities to avoid the tariff burden. Harley-Davidson expects ramping-up production in international plants will require incremental investment and could take at least 9 to 18 months to be fully complete.

Harley-Davidson maintains a strong commitment to U.S.-based manufacturing which is valued by riders globally.

Increasing international production to alleviate the EU tariff burden is not the company’s preference, but represents the only sustainable option to make its motorcycles accessible to customers in the EU and maintain a viable business in Europe. Europe is a critical market for Harley-Davidson.

In 2017, nearly 40,000 riders bought new Harley-Davidson motorcycles in Europe, and the revenue generated from the EU countries is second only to the U.S.

Harley didn’t specify which international plants will boost output for EU markets. The company operates manufacturing facilities in Brazil, India and Australia, and is beginning production in Thailand this year.

HOG closed at $44.21, it last traded at $42.50.


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Supreme Court ruling moves retail stocks

Physical retailers rise, online retailers drop after Supreme Court tax ruling

Supreme Court ruling moves retail stocks, Stockwinners
Supreme Court ruling moves retail stocks, Stockwinners

Shares of brick-and-mortar retailers are rising, while shares of e-commerce firms are slipping, after the Supreme Court ruled that online retailers can be required to collect sales taxes in states where they have no physical presence.

SUPREME COURT RULING

On Thursday, the Supreme Court sided with the state of South Dakota in a fight it brought against Wayfair (W) to require a business that has no physical presence in the state to collect its sales tax.

Supreme Court ruling moves retail stocks, Stockwinners
Supreme Court ruling moves retail stocks, Stockwinners

The Supreme Court ruled in a 5-to-4 vote that a 1992 judgement in Quill Corporation v. North Dakota regarding the physical presence rule was “unsound and incorrect,” according to a judgement posted to the high court’s website.

Justice Anthony Kennedy, in writing for the majority opinion, said the Quill decision had distorted the economy and resulted in states losing annual tax revenues between $8B-$33B.

“Quill puts both local businesses and many interstate businesses with physical presence at a competitive disadvantage relative to remote sellers,” he wrote.

“Remote sellers can avoid the regulatory burdens of tax collection and can offer de facto lower prices caused by the widespread failure of consumers to pay the tax on their own.”

WHAT’S NOTABLE:

Following the ruling, industry trade organization National Retail Federation issued a statement saying,

“Retailers have been waiting for this day for more than two decades. The retail industry is changing, and the Supreme Court has acted correctly in recognizing that it’s time for outdated sales tax policies to change as well.

This ruling clears the way for a fair and level playing field where all retailers compete under the same sales tax rules whether they sell merchandise online, in-store or both.”

ANALYST COMMENTARY

KeyBanc analyst Edward Yruma called the ruling a negative for Wayfair, arguing that it may reduce some of the price differential that has helped it gain share from traditional peers.

The ruling is also a negative, but to a lesser degree, for eBay (EBAY) and Etsy (ETSY), said Yruma, who views the impact on those two as more related to compliance and implementation.

He adds that the news could be a modest positive for retailers of high-ticket and branded products, such as Best Buy (BBY), Home Depot (HD), Lowe’s (LOW), La-Z-Boy (LZB), Kirkland’s (KIRK), RH (RH) and Williams-Sonoma (WSM).

PRICE ACTION

At Thursday midday, Target (TGT) rose 1.8%, Walmart (WMT) was up 0.7%, Costco (COST) rose roughly 1.1% while Amazon (AMZN) was down 0.4%, Etsy dropped about 2.5%, eBay fell 1.4% and Wayfair (W) was down 1.2%.

In addition, Avalara (AVLR), a software company focused on automated tax compliance that recently held its initial public offering, gained 17.1%.


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Esperion falls after drug failure

Esperion falls after Phase 3 study of bempedoic acid met primary endpoint

Esperion announces 'positive' top-line results from bempedoic acid study, Stockwinners.com
There were no clinically relevant differences between the bempedoic acid and placebo groups

Esperion (ESPR) announced top-line results from the second pivotal, Phase 3 study, the long-term safety study of bempedoic acid 180 mg, in this case evaluating the safety, tolerability and efficacy of bempedoic acid versus placebo in high-risk patients with atherosclerotic cardiovascular disease who are inadequately controlled with current lipid-modifying therapies, including maximally tolerated statin therapy.

The study included 2,230 patients and met the primary endpoint of safety and tolerability and the key efficacy endpoint with on-treatment LDL-C lowering of an additional 20% at twelve weeks, the company said.

Patients treated with bempedoic acid also achieved a significant reduction of 22% in high-sensitivity C-reactive protein, an important marker of the underlying inflammation associated with cardiovascular disease, Esperion added.

There were no clinically relevant differences between the bempedoic acid and placebo groups in the occurrence of adverse events with 78.5% and 78.7% respectively; or serious adverse events with 14.5% and 14.0% respectively, it added.

Discontinuations due to AEs were 10.9% and 7.1%, respectively for the bempedoic acid and placebo groups; discontinuations due to muscle-related AEs were 2.2% and 1.9%, respectively, in the bempedoic acid and placebo groups.

“In this study, the largest in our Phase 3 program, bempedoic acid was observed to be safe and well tolerated over a 52-week period, while providing clinically and statistically significant LDL-cholesterol lowering and reductions in hsCRP when added on to maximally tolerated statin therapy,” said Tim Mayleben, CEO of Esperion.

“In the coming months, results from our three remaining pivotal Phase 3 studies are expected to further validate the safety, efficacy and tolerability profile of bempedoic acid and the bempedoic acid / ezetimibe combination pill, definitively establishing these once-daily oral therapies as convenient and complementary to existing treatments for the 13 million people in the U.S. with ASCVD who live with elevated levels of LDL-cholesterol despite taking maximally-tolerated lipid-modifying therapy and remain at high risk for further cardiovascular disease or events, including heart attack and stroke.”

Esperion shares in premarket trading are down 27% to $52.40.


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Generic drug makers tumble on pricing

Generic drug makers under pressure following Aceto, Novartis news

Generic drug makers tumble on pricing, Stockwinners
Generic drug makers tumble on pricing

On Wednesday, Aceto (ACET) withdrew its guidance, citing the continued intense competitive and pricing pressures in the generic industry.

On Thursday, Novartis (NVS) reported that net sales at its generic unit Sandoz dropped 4% in the quarter.

Following both announcements, Wells Fargo analyst Davis #Maris told investors that he is not ready to call the bottom in generics pricing and sees a negative read-through for companies with large U.S. commodity generic exposure, such as Teva (TEVA) and Mylan (MYL).

Generic drug makers tumble on pricing, Stockwinners
Generic drug makers tumble on pricing, Stockwinners

GUIDANCE SUSPENSION, DIVIDEND REDUCTION

Last night, Aceto’s chairman Al Eilender said, “Given continued headwinds in the generics market, the Board has taken decisive action by bolstering the company’s senior leadership, engaging in proactive discussions with its secured lenders, and initiating a thorough evaluation of strategic alternatives.

” Strategic alternatives to be considered may include the sale of a key business segment, a merger or other business combination with another party, continuing as a standalone entity or other potential alternatives.

The company’s Board also anticipates a significant reduction of its dividend going forward and announced the appointment of Rebecca Roof as Interim CFO and the resignation of CFO Edward Borkowski, who has decided to pursue another opportunity.

Additionally, Aceto said that, in light of the persistent adverse conditions in the generics market, it is negotiating with its bank lenders a waiver of its credit agreement with respect to its total net leverage and debt service coverage financial covenants in the fiscal third quarter, and that the financial guidance issued on February 1, should no longer be relied upon.

The company also anticipates recording non-cash intangible asset impairment charges, including goodwill, in the range of $230M-$260M on certain currently marketed and pipeline generic products as a result of continued intense competitive and pricing pressures.

NOVARTIS RESULTS

This morning, Novartis reported first quarter core earnings per share of $1.28 and revenue of $12.69B, with consensus at $1.29 and $12.57B, respectively. The company also announced Sandoz net sales of $2.5B in the first quarter as 6 percentage points of price erosion, mainly in the U.S., were partly offset by volume growth of 2 percentage points. U.S. sales declined 18% mainly due to continued competitive pressure, the company added.

NEGATIVE READ-THROUGH

In a research note this morning, Wells Fargo’s Maris told investors that he thinks Aceto and Sandoz’s news show that the data continues to be negative for U.S. generic industry pricing. He sees a negative read-through for companies with large U.S. commodity generic exposure, such as Teva and Mylan.

Further, the analyst noted that he is not yet ready to call the bottom in generics pricing and believes those that have are “premature.”

WHAT’S NOTABLE

Citing a rapid degradation of the company’s asset-light business model in the wake of continued pressures for commoditized generics, Canaccord analyst Dewey Steadman downgraded Aceto two notches to Sell from Buy.

The company’s core human health business has been under significant pressure and has been unable to swiftly adapt to market conditions, he added. The analyst also lowered his price target on the shares to $2 from $10.

PRICE ACTION

In Thursday’s trading, shares of Aceto have plunged almost 62% to $2.85, while Novartis’ stock has dropped about 3% to $79.25. Also lower, shares of Teva and Mylan have slipped 2.5% and 0.25%, respectively.


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New tariff road kills: Acacia, Lumentum and Oclaro

Acacia, Oclaro plunge after U.S. bans sales to China’s ZTE

Lumentum to acquire Oclaro for $1.8B. Stockwinners.com
Oclaro tumbles on tariffs

Shares of several optical networking component providers – including Acacia Communications (ACIA), Oclaro (OCLR) and Lumentum (LITE) – are sliding after the U.S. Department of Commerce reportedly banned U.S. companies from selling components to Chinese telecom equipment maker ZTE Corp. (ZTCOY).

Acacia Comms tumbles, Stockwinners.com
Acacia Comms tumbles, Stockwinners.com

Loop Capital analyst James Kisner previously has noted that China’s ZTE announced it was raising $2.1B to fund the development and deployment of 5G wireless networks, which he read as a positive sign for optical component vendors. Oclaro (OCLR) and Acacia Communications (ACIA) have notable exposure to ZTE, Kisner pointed out, adding that he expected most optical component makers to benefit from 5G deployment in China.

In Monday’s trading following the news of the ZTE sales ban, Acacia shares have fallen over 18%, Oclaro has dropped 7.5% and Lumentum is down 8%.


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Alkermes lower following FDA action

Alkermes announces FDA Refusal to File letter received for ALKS 5461

Alkermes announces FDA Refusal to File letter received for ALKS 5461. Stockwinners
Alkermes announces FDA Refusal to File letter received for ALKS 5461.

Alkermes (ALKS) announced that it received a Refusal to File letter from the U.S. Food and Drug Administration regarding its New Drug Application for ALKS 5461, a once-daily, oral investigational medicine with a novel mechanism of action for the adjunctive treatment of major depressive disorder in patients with an inadequate response to standard antidepressant therapies.

Upon its preliminary review, the FDA has taken the position that it is unable to complete a substantive review of the regulatory package, based on insufficient evidence of overall effectiveness for the proposed indication, and that additional well-controlled clinical trials are needed prior to the resubmission of the NDA for ALKS 5461.

In addition, FDA has requested the conduct of a bioavailability study to generate additional bridging data between ALKS 5461 and the reference listed drug, buprenorphine.

Alkermes said it strongly disagrees with the FDA’s conclusions and plans to appeal the FDA’s decision.

The company intends to seek immediate guidance, including requesting a Type A meeting with the FDA, to determine appropriate next steps and what additional information may be required to resubmit the NDA.

Alkermes is evaluating the impact of this update on its previously-issued financial guidance for 2018; any update will be provided in its first quarter 2018 financial results disclosures.

Alkermes CEO Richard Pops said: “We strongly believe that the clinical development program, including data from more than 1,500 patients with MDD, provides substantial evidence of ALKS 5461’s consistent antidepressant activity and a favorable benefit-risk profile.”

PRICE ACTION

ALKS closed at $57.96, it last traded at $47.00.

Shares of Intra-Cellular Therapies (ITCI) are down 9%, or $1.92, to $19.13 in premarket trading. STAT’s Adam Feuerstein tweeted following the Alkermes news, “Anyone confident in $ITCI now? I wouldn’t be.”

Intra-Cellular on March announced that it had a “positive” pre-New Drug Application meeting with the FDA regarding lumateperone for the treatment of schizophrenia.

At the meeting, the company and the FDA agreed on the proposed content and timing of a rolling NDA submission. The company plans to complete its NDA submission by mid-2018.


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Universal Display, other Apple suppliers fall as company to develop own screens

Universal Display, other Apple suppliers fall as company to develop own screens 

Universal Display, other Apple suppliers fall as company to develop own screens . Stockwinners.com
Universal Display, other Apple suppliers fall as company to develop own screens .

Shares of organic light-emitting diode technology maker Universal Display (OLED) and other suppliers are down in morning trading amid speculation Apple (AAPL) is producing its own device displays for the first time.

APPLE DEVELOPING DISPLAYS

Apple has been quietly designing and producing limited quantities of its own MicroLED device screens for the first time “for testing purposes” using a manufacturing facility near its headquarters, Bloomberg reported Monday, citing people familiar with the matter.

The move by the company, which is significantly investing in the development of the next-generation MicroLED screens that aim to make devices slimmer and less of a drain on power, could potentially hurt a range of suppliers in the long-term, from screen makers like Samsung (SSNLF), Japan Display, Sharp (SHCAY) and LG Display (LPL) to companies like Synaptics (SYNA) and Universal Display, according to the report.

The MicroLED screens are much more difficult to produce than organic light-emitting diode screens and customers will likely have to wait a few years before the technology is released.

Apple is planning to make the new displays available first in future Apple Watch devices, but it is unlikely the screens will reach an iPhone for at least three to five years.

An Apple spokeswoman declined to comment when contacted by Bloomberg.

WHAT’S NOTABLE

LG Display is expected to start supplying some of the OLED displays for Apple’s iPhone X, shipping as many as 60M displays for the smartphone starting in June, CNBC reported in December.

At the time of the report, discussions between Apple and LG Display were ongoing and LG said, “Regarding the OLED supply deal for Apple’s iPhone X, nothing has been set in detail.

When anything is confirmed in detail, we will announce it.” Apple has previously used Samsung as its exclusive supplier of OLED panels for iPhones.

PRICE ACTION

In Monday’s trading, shares of Universal Display dropped 10.1% to $111.52. Meanwhile, shares of LG Display trading in New York were down 1.2% to $12.92, Sharp fell 2.2% to $8.05 and Synaptics dropped 1% to $47.35.


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Stitch Fix shares could unravel at the seam

Stitch Fix drops after earnings,  analyst sees lock-up bringing pressure

Stitch Fix drops after earnings. Stockwinners.com
Stitch Fix drops after earnings

Shares of Stitch Fix (SFIX) dropped in Tuesday morning trading following the company’s quarterly earnings report.

The personal shopping and clothing provider saw revenue come in above the Wall Street consensus and posted a 31% year-over-year increase in active clients.

Following the earnings report, an analyst at JPMorgan estimated that about 31M shares will be released from lock-up on Wednesday, which could create near-term weakness.

EARNINGS AND GUIDANCE

After the market close on Monday, Stitch Fix reported second quarter adjusted earnings per share of 7c, slightly exceeding analysts’ 6c consensus, though its EPS including items was 2c. Revenue for the quarter of $295.5M beat the $291.24M consensus and Stitch Fix said it grew active clients to 2.5M, an increase of 588,000 and 31% year-over-year.

Looking ahead, Stitch Fix forecast third quarter revenue of $300M-$310M, at the high end of analysts’ $300.29M consensus, and fiscal 2018 revenue of $1.19B-$1.22B, against the Street consensus of $1.2B.

On its quarterly earnings conference call, Stitch Fix said its net revenue per active client for the 12 months ended January 27 was $437, a decrease of 3.9% vs. last year.

The company commented, “This decline was primarily driven by our continued and growing strategic expansion into Men’s and lower price point merchandise. Although our male clients on average have a lower purchase frequency, which dilutes our overall net revenue per active client, we continue to be pleased with the revenue contribution and profitable unit economics of the Men’s category.

Similarly, we’ve been encouraged by our ability to serve lower price point clients effectively and plan to further penetrate this market.”

WHAT’S NOTABLE

Stitch Fix’s quarterly earnings report was its second as a public company.

The company’s IPO in November was overshadowed by the disappointing IPO of another subscription service, Blue Apron (APRN), as well as a threat from Amazon’s (AMZN) Prime Wardrobe and Nordstrom’s (JWN) Trunk Club.

Stitch Fix, which debuted at $15 per share, has seen its shares gain over 50% since November.

ANALYST COMMENTARY

In a research note to investors, JPMorgan analyst Doug Anmuth estimated that about 31M Stitch Fix shares will be released from lock-up before the market open on Wednesday, March 14, which could create near-term weakness.

#Anmuth explained that Stitch Fix’s IPO held a price-triggered lock-up agreement where 35% of the locked-up shares become eligible for release beginning 90 days after the IPO if certain criteria are met, including shares closing 25% or more above the IPO price on 10 out of 15 consecutive trading days and if the company is not in its trading black-out period.

The analyst noted that Stitch Fix qualified for the price and reporting threshold last month, but since this occurred during its black-out period, shares do not qualify for release until one day post-earnings.

While Anmuth remains confident in Stitch Fix’s market opportunity and ability to stabilize growth, he thinks growth will become more challenging as the company has passed the period of heavy viral growth and margin compression is likely through fiscal 2019.

The analyst has a Neutral rating and $26 price target.

PRICE ACTION

Shares of Stitch Fix are down 2% to $24 in Tuesday’s trading.


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GlycoMimetics tumbles after announcing Phase 3 trial design

GlycoMimetics tumbles after announcing Phase 3 trial design for GMI-1271 in myeloid leukemia patients

 

GlycoMimetics tumbles, Stockwinners.com
GlycoMimetics announces new Phase 3 for GMI-1271

Earlier, GlycoMimetics announced its design for a randomized, double-blind, placebo-controlled Phase 3 clinical trial to evaluate GMI-1271 in combination with MEC or in combination with FAI in individuals with relapsed/refractory acute myeloid leukemia.

The design is aligned with guidance received from the U.S. Food and Drug Administration.

The single pivotal trial is planned to enroll 380 adult patients worldwide and is expected to begin in the third quarter of 2018.

The primary endpoint will be overall survival, and censoring for transplant in the primary efficacy analysis will not be required. Key secondary endpoints will include incidence of severe mucositis and remission rate, which will be assessed in a hierarchical fashion for potential inclusion in the product labeling, if GMI-1271 is approved by the FDA. In 2017, GMI-1271 received Breakthrough Therapy Designation.

“Reaching alignment with the FDA on overall survival as the primary endpoint for the trial, without statistical censoring for transplant, positions GMI-1271 well for a potential successful outcome,” said Rachel King, Chief Executive Officer of GlycoMimetics.

“Getting more patients to transplant following treatment with GMI-1271 is one of our goals for this therapy. If we accomplish this, we hope GMI-1271 will contribute to prolonged overall survival for relapsed/refractory AML patients. We believe this is a rigorously designed Phase 3 trial that has the potential to bring us one step closer to meeting the significant unmet needs of this patient population.

In addition, we believe that our trial design should streamline the path to data on overall survival, considered the ‘gold standard’ of clinical benefit, and that if this primary endpoint is achieved, it should position GMI-1271 optimally with U.S. and European regulatory agencies, as well as in the marketplace.”

“Our development strategy now sets us up for multiple, value-creating clinical data readouts, the first of which is topline data from the ongoing Phase 3 trial of rivipansel in sickle cell disease in the second half of 2018,” Ms. King added.

“In early 2019, we anticipate topline data from our proof-of-concept trial of GMI-1271 in multiple myeloma, and now, by the end of 2020, we expect to have topline data from our pivotal trial of GMI-1271 in patients with relapsed/refractory AML.”

PRICE  ACTION

GLYC closed at $22.82. In after hours trading it traded at $18.55.


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Gun stocks fall as pressure mounts on NRA

Gun stocks fall as corporate pressure mounts on NRA

Gun stocks fall as pressure mounts on NRA. Stockwinners.com
Gun stocks fall as pressure mounts on NRA – AR15

The National Rifle Association, or #NRA, an American organization that advocates for gun rights, is seeing public pressure mount from corporations that it has partnered with in the wake of the Parkland, Florida school shooting, which resulted in 17 deaths.

PARTNERSHIPS DROPPED

The nation’s largest privately owned bank, First National Bank of Omaha, said on Thursday that it will not renew its contract with the NRA for a branded Visa card.

A spokesman for the bank said in a statement, “Customer feedback has caused us to review our relationship with the NRA. As a result, First National Bank of Omaha will not renew its contract with the National Rifle Association to issue the NRA Visa Card.”

Additionally on Thursday, privately held Enterprise Holdings, which owns the Enterprise, Alamo, and National car rental brands, said it will end its partnership with the NRA — which gave NRA members discounts — next month.

FORMER PARTNERS DISTANCING THEMSELVES

Hotel companies Best Western and Wyndham Hotels, which were previously targeted for boycotts following the Newton, Connecticut elementary school shooting in 2012, have posted dozens of tweets each, letting customers know they are no longer affiliated with the NRA.

Wyndham tweeted repeatedly, “Please know, Wyndham is no longer affiliated with the NRA,” while Best Western tweeted a similar message, “Best Western Hotels & Resorts does not have an affiliation with and is not a partner of the National Rifle Association.”

MORE PARTNERSHIPS DROPPED

Over the course of the day, more companies joined the growing chorus, including Hertz (HTZ), which ended its rental car discount program with the NRA, Symantec (SYMC), which stopped its discount program with the NRA, Metlife (MET), which ended its insurance discount program with the NRA, and Chubb (CB), which will stop underwriting a NRA-branded insurance policy for gun owners.

PRICE ACTION

Publicly traded gunmakers are down in Friday’s trading on a day the broader markets are rising. American Outdoor Brands Corp (AOBC), formerly known as Smith & Wesson, is down 5.5% to $9.56, while Sturm Ruger & Company (RGR) is down 3.67% to $47.20.


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MiMedx tumbles on questionable “sales practices”

MiMedx sinks after announcing internal investigation into sales practices

MiMedx tumbles on questionable "sales practices". Stockwinners.com
MiMedx tumbles on questionable “sales practices”

Shares of MiMedx (MDXG) are sinking after the company delayed its Q4 results to conduct an internal investigation.

The biopharmaceutical company said earlier that its Audit Committee has engaged independent legal and accounting advisors to conduct an internal investigation into current and prior-period matters relating to allegations regarding certain sales and distribution practices.

Company executives are also reviewing, among other items, the accounting treatment of certain distributor contracts.

MiMedx believes, however, that based on information available to date, the “outcome of such investigation should not have a material impact on revenue guidance for 2018.”

The company’s CEO Pete Petit stated, “”Our Board of Directors and executives believe it is in the best interests of our Company and shareholders for our Audit Committee to address these allegations in an internal investigation with the support of independent legal and accounting advisors. We look forward to releasing our 2017 financial results as soon as this process is complete.

MiMedx has been experiencing rapid growth over the last few years as our product portfolio continues to meet significant, unmet needs in the marketplace. We are literally saving lives by saving limbs, and we expect to continue to deliver operational and clinical success in the months and years to come.”

MDXG closed at $14.47. It last traded at $11.50.


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CBOE Global Markets falls due to VIX

CBOE Global Markets falls on concerns over VIX Futures

CBOE Global Markets falls amid VIX swings - Stockwinners.com
CBOE Global Markets falls amid VIX swings – Stockwinners.com

Shares of CBOE Global Markets (CBOE) are falling after a Tuesday sell-off amid swings in market volatility which saw the CBOE volatility index rise over 50.

CBOE RESPONDS

CBOE defended its VIX volatility index after investors and analysts blamed exchange-traded products that aim to track the measure for worsening the wild trading in the stock market, the Financial Times reported Tuesday.

“The markets were resilient…We were generally pleased with how [the VIX] acted in a very volatile and stressful time,” said William Speth, CBOE VP of research and product development. “I think there are a lot of things going on here,” he said.

“Certainly the VIX ETPs are part of the mix, but the 800-pound gorilla has been these volatility control funds.”

MARKET “CLEARLY WORRIED”

On Tuesday, Wells Fargo analyst Christopher Harris said that spikes in volatility would normally be seen as good for CBOE.

However, given that the losses in the overcrowded trade of “short volatility” have been so severe, the market is “clearly worried” about the negative implications for future VIX volumes, which he believes is weighing on CBOE shares.

While he cannot say how much of CBOE’s volumes are tied to short volatility strategies, Harris said that if VIX related volumes were to go back to 2015 levels that would be 15% dilutive to his 2018 EPS estimate, adding that the recent selloff appears to be factoring in “quite a lot of downside.”

Harris has an Outperform rating on CBOE shares.

On Wednesday, JPMorgan analyst Kenneth Worthington downgraded CBOE to Neutral from Overweight and cut his price target for the shares to $110 from $131.

The liquidation and fall of various exchange traded notes represents a risk to VIX Futures volumes, likely bringing a reduction in VIX Futures trading activity looking over the next few months, Worthington wrote.

He also sees some risk to volumes in VIX options and potential for a deterioration in CBOE’s valuation as VIX has been a key growth driver for the company.

Meanwhile, Goldman downgraded CBOE to Neutral from Buy and cut its price target to $115 from $140. Analyst Alexander Blostein said the unwind in the CBOE’s VIX ETF products will likely weigh on the company’s VIX futures franchise, creating headwinds to the firm’s top-line growth and potentially the stock’s valuation.

The analyst added he continues to see longer-term growth prospects in the CBOE/BATS combination, but believes the shares may lag.

CME UPGRADE

Goldman’s Blostein also upgraded CME Group (CME) to Buy from Neutral and raised his price target to $180 from $160.

Blostein expects CME’s revenue growth to accelerate in 2018/19 amid significant growth in open interest and the increasing likelihood of normalization of volatility.

The analyst expects the prospects of rising inflation expectations and normalization of volatility to drive product velocity higher over the next two years, adding to already to the healthy build-up in open interest.

PRICE ACTION

CBOE Global Markets  is down 3.2%, or $3.73, to $113.21, in Wednesday’s trading. Meanwhile, CME Group is up 2.1% to $160.95.


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Chipotle drops on downgrade

Analyst says sell Chipotle amid ‘depressed’ brand perceptions, more competition

Chipotle Mexican Grill spokesman Chris Arnold says the company is aware of a "small number" of illnesses linked to a store in Sterling, Virginia
Chipotle drops on downgrade

Shares of Chipotle Mexican Grill (CMG) dropped in Thursday’s trading after a UBS analyst said to sell the stock, telling investors that brand perceptions “remain depressed” while competition is unlikely to ease this year.

SELL CHIPOTLE

UBS analyst Dennis #Geiger downgraded Chipotle to Sell from Neutral, saying he is “concerned” about deteriorating online customer review trends and possible implications for the trajectory of sales.

The analyst, who cut his price target to $290 from $345, noted that online review trends have continued to trend downward and have dropped below pre-food safety crisis lows.

He contended that “Despite aggressive efforts to improve brand perceptions through a new national advertising campaign and the launch of new products including queso recently, customer review scores have not shown any signs of improvement.”

Additionally, Geiger told clients that in addition to “depressed” brand perceptions, competition is unlikely to ease in 2018 and said Chipotle’s unit development expectations could be “ambitious.”

His analysis of more than 230,000 Chipotle reviews found that food safety, combined with rising competition, has likely weighed on Chipotle’s efforts to regain customers.

“The increasing penetration of fast casual brands and traditional quick service restaurants has likely weighed on Chipotle’s efforts to regain lost customers. In the aftermath of the Chipotle food safety incidents, our survey analysis indicated ‘like other QSR better’ as the second most cited reason for eating less at Chipotle,” Geiger said.

WHAT’S NOTABLE

Chipotle has faced several foodborne illness outbreaks since 2015. As recently as December 2017, public health officials in Los Angeles investigated a possible foodborne illness outbreak at a local Chipotle restaurant.

Chipotle confirmed that it was aware of the reports tied to its Pico Boulevard location, but said it had not heard from any customers directly. “As a precautionary measure, we have implemented heightened sanitization measures at this restaurant, which we do as a matter of policy if ever we receive reports of illness — even if they are not substantiated,” Chipotle spokesman Chris Arnold said at the time.

The company’s executive ranks have also been in turmoil, with the company searching for a new chief executive officer.

When a new CEO is appointed, current CEO and founder Steve Ells said he will focus primarily on innovation. In December, an analyst at Bernstein called Chipotle a “reasonably” attractive takeover target.

PRICE ACTION

In Thursday morning trading, shares of Chipotle Mexican Grill are down 4.3% to $310.92.


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Newell Brands tumbles on outlook

Newell Brands announces resignation of three directors from board

Newell Brands exploring portfolio reconfiguration to simplify operations

Newell Brands tumbles on outlook, Stockwinners.com
Newell Brands tumbles on outlook

Newell Brands (NWL) announced preliminary estimated results for 2017.

The company currently anticipates core sales growth of approximately 0.8%, down from previous guidance 1.5% to 2.0%, and normalized EPS in the range of $2.72-$2.76, down from previous guidance $2.80-$2.85.

Sees approximately $1B of operating cash flow generated in the fourth quarter of 2017, resulting in full year operating cash flow of approximately $930M, versus previous guidance of $700M-$800M.

The company’s core sales results were impacted by an acceleration of the gap between sell-in and sell-through results due to a continuation of retailer inventory rebalancing in the U.S. and the bankruptcy of a leading baby retailer.

Margins were impacted by the negative mix effect of lower Writing sales and a reduction of fixed cost absorption due to shorter cycle runs on self-manufactured products, designed to reduce inventories and maximize operating cash flow.

Newell Brands CEO says majority of brands performing well despite difficult 2H17

“We believe that exiting non-strategic assets, reducing complexity and focusing on our key consumer-focused brands will make us more effective at unlocking value and responding to the fast-changing retail environment,” said Michael Polk, Newell Brands CEO.

“Despite a very difficult commercial outcome in the second half of 2017, the vast majority of our brands are performing well in the marketplace.

Our e-commerce business grew at a strong double-digit pace, our market shares have continued to increase and sell-through growth has accelerated with Q4 2017 growth rates ahead of Q3 2017 in the U.S., which strengthens our confidence in our brand, design and innovation-led strategy.

Importantly, our early efforts to improve working capital metrics look to have yielded good results with operating cash flow of nearly $1 billion dollars in Q4, despite the increased margin pressure from planned downtime in our factories and input cost inflation. We are committed to achieving our transformation objectives and are taking decisive action with speed to adapt our agenda to the unprecedented volatility in our retailer landscape,” Polk added.

PORTFOLIO CHANGES

Newell Brands announced that it will explore a series of strategic initiatives to accelerate its transformation plan, improve operational performance and enhance shareholder value.

Key components include: Focusing Newell’s portfolio on nine core consumer divisions with approximately $11B in net sales and $2B of EBITDA;

Exploring strategic options for industrial and commercial product assets, including Waddington, Process Solutions, Rubbermaid Commercial Products and Mapa;

Exploring strategic options for the smaller consumer businesses, including Rawlings, Goody, Rubbermaid Outdoor, Closet, Refuse and Garage, and U.S. Playing Cards;

Newell Brands exploring portfolio reconfiguration to simplify operations. Stockwinners.com
Newell Brands exploring portfolio reconfiguration

 

Execution of these strategic options would result in a significant reduction in operational complexity through a 50% reduction in the company’s global factory and warehouse footprint, a 50% reduction in its customer base and the consolidation of 80% of global sales on two ERP platforms by end of 2019.

If fully actioned, Newell Brands would expect to be an approximately $11B focused portfolio of leading consumer-facing brands with attractive margins and growth potential in global categories. These brands would leverage the company’s advantaged capabilities in brands, innovation, design and e-commerce.

The company expects proceeds after tax to be greater than that required to achieve a leverage ratio below the lower end of its current leverage ratio target range.

Newell Brands intends to begin the evaluation process immediately and expects any resulting transactions to be completed by the end of 2019.

DOWNGRADES

Barclays analyst Lauren #Lieberman downgraded Newell Brands to Equal Weight from Overweight and cut her price target for the shares to $26 from $35.

“Put simply, we’ve lost confidence,” the analyst says following this morning’s preannounced Q4, announced strategic overhaul and departure of certain board members.

Lieberman has concerns given the scale of Newell’s transformation expected in 2018. She also sees a lack of visibility around cash flow.

SunTrust said Newell reset the bar with a number of announcements today announcing Q4 results, below consensus 2018 guidance, a new strategic initiative to simplify its portfolio, and BOD changes.

The firm’s analyst actually views today’s announcements as a positive and said the news makes shares even more investable for 2018.

NWL is down 22% to $24.20.


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