Monica Gray

Monica has an undergraduate degree in Accounting and an MBA she earned - with Honors. She has six years of experience in the financial markets and has been an analyst for the past two years.

What’s On Focus As Arena Pharmaceuticals, Inc. (NASDAQ:ARNA) Reports Q4?

Arena Pharmaceuticals, Inc. (NASDAQ:ARNA)

Arena Pharmaceuticals, Inc. (NASDAQ:ARNA) reports Q4 2016 results on March 6. An earlier schedule showed the company would release the results on February 27. Arena has had a mixed track record of quarterly earnings. It has exceeded expectations twice, met expectations once and missed expectations once in the trailing four quarter.

As the company reports Q4, analysts are expecting EPS loss of $0.09. The company posted EPS loss of $0.13 in the same quarter a year earlier, meeting the consensus estimate.  Revenue in the year-ago quarter was $7.8 million, short of consensus estimate of $8.26 million.

For the last quarter, Q3 2016, ARNA produced EPS loss of $0.05, besting consensus estimate of EPS loss of $0.07. Revenue of $19 million also topped the consensus estimate of $13.99 million.

Focus on pipeline

Arena Pharmaceuticals, Inc. (NASDAQ:ARNA) has only one approved product in its portfolio and that is obesity treatment called Belviq. Despite a large addressable market in the US, Belviq sales are yet to impress.

As Arena reports Q4, investors will be looking for clues about how the company intends to improve Belviq sales. Poor Arena sales have been linked to low coverage by third-party insurers, narrow focus on only a certain patients and the tendency of doctors to prescribe drugs for symptoms of obesity instead of the actual disease.

Arena Pharmaceuticals, Inc. (NASDAQ:ARNA) has been working to extend the label of Belviq and a study for the label extension is underway, so positive outcome from the trial would allow Arena to extend the label of the drug. Extended label should expand the drug’s addressable market, potentially yielding more revenue for the company.

In another effort to squeeze more revenue from Belviq, Arena late last year introduced a once-daily formulation of the drug. Because Arena made the move last October, sales of the once-daily Belviq should be reflected in the upcoming 4Q results.

Other product candidates

Other than Belviq, Arena Pharmaceuticals, Inc. (NASDAQ:ARNA) investors will also have their eyes and ears on the company’s pipeline update.

Arena has several candidates in its pipeline. They include ralinepag, which is being developed as a treatment for pulmonary arterial hypertension and is in Phase 2 clinical study. The other is etrasimod, which is also a Phase 2 candidate being developed as a treatment for ulcerative colitis.

Stock movement

Shares of Arena Pharmaceuticals, Inc. (NASDAQ:ARNA) rose 6.8% to $1.57 on Monday. The stock is up more than 10% since the beginning of the year, and has risen about 2% over the last one year.

2/27/2017
Ticker Symbol ARNA
Last Price a/o, 4:02PM EST  $                          1.57
Average Volume (mlns) 1.61
Market Cap (mlns)  $                  381.91
Sales (mlns) $46.40
Shares Outstanding (mlns) 243.25
Share Float (mlns) 242.12
Shortable Yes
Optionable Yes
Inside Ownership 0.59%
Short Float 3.78%
Short Interest Ratio 5.67
Quarterly Return -1.26%
YTD Return 10.56%
Year Return 2.61%

I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 96 hours. All information, or data, is provided with no guarantees of accuracy.

About the author: Monica Gray has an undergraduate degree in Accounting and an MBA – earned with Honors. She has six years of experience in the financial markets and has been a securities analyst for the past two years.

What Caused J C Penney Company Inc (NYSE:JCP) Shares To Drop 5.8%

J C Penny Inc (NYSE:JCP)

J C Penny Inc (NYSE:JCP) on Friday became the latest major retail brand to highlight the struggles of retailers. The company reported mixed results for the December quarter, or 4Q2016, and joined the chorus of retail footprint cutting. J C Penney said it will close at least 130 stores in the coming months and send 6,000 workers on early retirement. Those measures are expected to help the company prune costs and achieve more agility, but many investors have decided to distance themselves from the stock as seen the share price movement.

Shares of J C Penney pulled back more than 5.8% to close at $6.46 on Friday. The stock is down more than 22% year-to-date and has declined more than 32% over the last one year.

Investor worries over tough business environment for legacy retailers may have caused shares of J C Penney to tank.

Mixed quarterly earnings

J C Penney Company Inc (NYSE:JCP) generated revenue of $3.96 billion in 4Q2016, missing the consensus estimate of $3.98 billion. Revenue in the year-ago period was $4 billion. Sales at stores that remained opened for at least a year were down 0.7%, steeper than 0.3% decline that analysts expected on the average.

However, adjusted EPS of $0.64 in the latest quarter increased sharply from $0.39 a year ago and easily beat consensus estimate for $0.61.

Weak sales in the women’s category and continued competitive pressure from online retailers hurt J C Penney’s performance in the latest quarter.

Early retirement for workers

J C Penney Company Inc (NYSE:JCP) intends to buy out 6,000 workers as part of the measures to lower its payroll expenses. However, positions left by workers who choose to retire early will be filled by employees affected by the planned store closure. Perhaps that is a way to calm fears over massive job loss at a time when the Trump administration has focused on job creation as one of its signature agendas.

Amazon.com, Inc. (NASDAQ:AMZN), the disruptive online retailer that has caused problems for J C Penney and other legacy retailers, has pledged to add more than 100,000 full-time jobs over the next one and a half years.

Store closure

J C Penney is closing between 130 and 140 stores. The store restructuring is expected to save the company $200 million in annual expenses. However, the restructuring will initially cost $225 million.

In announcing store closure, J C Penney Company Inc (NYSE:JCP) has joined the ranks of Macy’s Inc (NYSE:M), Sears Holdings Corp (NASDAQ:SHLD) and other legacy retailers that are eliminating hundreds of jobs.

2/24/2017
Ticker Symbol JCP
Last Price a/o, 4:02PM EST  $                       6.46
Average Volume (mlns) 19.44
Market Cap (blns)  $                  2.11
Sales (blns) $12.58
Shares Outstanding (mlns) 327.38
Share Float (mlns) 303.26
Shortable Yes
Optionable Yes
Inside Ownership 1.00%
Short Float 23.29%
Short Interest Ratio 3.63
Quarterly Return -33.54%
YTD Return -22.26%
Year Return -22.73%

I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 96 hours. All information, or data, is provided with no guarantees of accuracy.

About the author: Monica Gray has an undergraduate degree in Accounting and an MBA – earned with Honors. She has six years of experience in the financial markets and has been a securities analyst for the past two years.

Why Upbeat China Economic Outlook Bodes Well For Coach Inc (NYSE:COH)

Coach Inc (NYSE:COH)

When Coach Inc (NYSE:COH) reported earnings results for the December quarter, which is its fiscal 2Q2017, China was one of the regions in which the company registered strong growth in its international segment. With that the International Monetary Fund (IMF) recently upgrading its economic outlook for China, the move seems to bode well for Coach in the country.

In China, economic stimulus measures by the government are expected to drive GDP expansion in 2017.  The IMF expects the economy to continue growing by 6% in 2018.

Coach’s Chinese sales increased 6% on a constant currency basis in F2Q2017. Strong results in Macau and Hong Kong largely contributed to the gains. The IMF is now projecting that China’s economy will expand 6.5% in 2017, which is 0.3% higher than the fund’s earlier growth projection. A more robust economic expansion rate in China means a larger market for Coach’s products in the country.

European sales up double-digit

Coach Inc (NYSE:COH) also fared well in Europe as sales in the region increased double-digit in F2Q2017. New distribution deals in Europe backed Coach’s gains in the region.

North America sales up

Coach’s business also grew in North America, with sales jumping 2%. Greater conversion and higher prices backed the company’s gains in the region.

F2Q2017 results

Overall, Coach Inc (NYSE:COH) generated revenue of $1.32 billion, up 3.8%. The revenue was in-line with consensus estimate for $1.32 billion. Adjusted EPS of $0.75 increased from $0.68 a year earlier and topped the consensus estimate of $0.74.

Outlook 2017

Coach expects fiscal 2017 revenue to increase at low-single digit pace, largely because of a stronger dollar that is causing international sales to be worth less when converted. However, the company expects fiscal 2017 operating margin to be in the range of 18.5% – 19.0%.

Stock movement

Shares of Coach edged up less than 1% to close at $38.02 on Friday. The stock has remained fairly steady since the beginning of 2017 and over the last one year. Year-to-date, the stock is up more than 8%, and over the last 12 months the stock is down less than 1.5%.

Like other legacy retailers, Coach Inc (NYSE:COH) has been rattled by the online shopping trends. While traditional retailers are trying to catch up with their online rivals such as Amazon.com, Inc. (NASDAQ:AMZN), they still have a long way to go and Coach proven that in its F2Q2017 earnings. The company said its e-commerce comps declined 3% in the latest quarter, driven down by a lack of aggressive promotions during the quarter.

2/24/2017
Ticker Symbol COH
Last Price a/o, 4:02PM EST  $                        38.02
Average Volume (mlns) 3.39
Market Cap (blns)  $                  10.65
Sales (blns) $4.55
Shares Outstanding (mlns) 280.1
Share Float (mlns) 280.02
Shortable Yes
Optionable Yes
Inside Ownership 0.10%
Short Float 2.82%
Short Interest Ratio 2.32
Quarterly Return -0.31%
YTD Return 8.57%
Year Return 1.22%

I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 96 hours. All information, or data, is provided with no guarantees of accuracy.

About the author: Monica Gray has an undergraduate degree in Accounting and an MBA – earned with Honors. She has six years of experience in the financial markets and has been a securities analyst for the past two years.

Why Did Shares Of Achillion Pharmaceuticals, Inc. (NASDAQ:ACHN) Plunge 9%?

Achillion Pharmaceuticals, Inc. (NASDAQ:ACHN)

What caused shares of Achillion Pharmaceuticals, Inc. (NASDAQ:ACHN) to tank nearly 9% on Friday? The stock movement may be linked to a recent securities filing in which the company gave a notice of a plan to raise additional cash through the sale of new securities.

In a filing with the US Securities and Exchange Commission (SEC), Achillion informed the regulator of its intent to raise up to $250 million by securities offering. But it didn’t specify the nature, timing or pricing of the securities fundraiser. However, the market seems to believe the company is planning to dilute its stock, which could destroy value for existing shareholders. That may have sparked the selloff in the stock, which sent the shares down almost 9% on Friday to settle at $3.86.

Shares of Achillion Pharmaceuticals, Inc. (NASDAQ:ACHN) have retreated 6% year-to-date and are down more than 47% over the last one year.

Beating earnings

Before the issue of planned securities offering appeared to spoil the party, investors recently warmed up to shares of Achillion following the company’s a little upbeat 4Q2016 earnings. The company posted EPS loss of $0.03, better than EPS loss of $0.20 that analysts were expecting on the average. However, revenue of $15 million declined 52.5% year-over-year.

Though 4Q2016 may not have been the primary reason for investor optimism in Achillion Pharmaceuticals, Inc. (NASDAQ:ACHN), the results offered hope of a bright future as the company continues to develop its pipeline. Additionally, several rating firms have recently commented positively on the prospects of Achillion.

For instance, Ladenburg Thalmann analysts initiated their coverage of Achillion with a BUY rating and 12-month price target of $10 on February 2. The analysts cited the company’s pipeline programs, and the various milestones and royalties bearing collaboration the company has with partners such as Johnson & Johnson (NYSE:JNJ)’s Janssen.

$900 million in potential milestones

The collaboration with Janssen involves development of a HCV drug and could yield more than $900 million in milestones for Achillion, and earn the company royalties in the range of mid-20%.

However, HCV is a highly competitive space and there can be no guarantee that Achillion Pharmaceuticals, Inc. (NASDAQ:ACHN) will hit the milestones and unlock the promised payments. The company’s planned securities fundraising could be a measure to raise additional funds that can be used to develop the pipeline so that the company doesn’t fall behind the competition in HCV and other product categories.

2/24/2017
Ticker Symbol ACHN
Last Price a/o, 4:02PM EST  $                       3.86
Average Volume (mlns) 1.57
Market Cap (mlns)  $                   579.50
Sales (mlns) $31.60
Shares Outstanding (mlns) 150.13
Share Float (mlns) 118.17
Shortable Yes
Optionable Yes
Inside Ownership 0.10%
Short Float 9.03%
Short Interest Ratio 6.8
Quarterly Return -8.31%
YTD Return -6.54%
Year Return -43.65%

I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 96 hours. All information, or data, is provided with no guarantees of accuracy.

About the author: Monica Gray has an undergraduate degree in Accounting and an MBA – earned with Honors. She has six years of experience in the financial markets and has been a securities analyst for the past two years.

Is Chesapeake Energy Corporation (NYSE:CHK) Going Anywhere?

Chesapeake Energy Corporation (NYSE:CHK)

Chesapeake Energy Corporation (NYSE:CHK) posted largely feeble financial results for Q4 2016, which it reported on February 23. Revenue of $2.02 billion fell 24% from a year earlier quarter and also came short of the average revenue estimate of analysts polled by Reuters. Analysts were expecting the company to generate revenue of $2.08 billion for the quarter. The adjusted EPS of $0.07 that Chesapeake posted in Q4 2016 was in line with expectations.

Chesapeake’s results in the latest quarter were hurt by weaker prices and lower volumes. Unprofitable hedging also caused an adverse impact on the company’s earnings. Oil companies struggled with falling prices of the commodity for nearly two years amid a global supply glut. However, a landmark deal by the OPEC last year brought hope of price recovery in the oil market as members of the cartel agreed to cap their output. However, price recovery has been slow.

The nearly two years of downbeat oil prices not only impacted earnings at Chesapeake, but also left the company deep in the red. The company exited Q4 2016 with net long-term debt of more than $9.9 billion, offset by cash balance of $882 million.

What happens next?

While Chesapeake Energy Corporation (NYSE:CHK) fell short of providing clear assurance that 2017 would be a great year, the management provided several hints that the company is steadily regaining its footing and the coming years should be better. Though investors should be aware that any unexpected developments in the oil market that cause further and prolonged price declines could send the management of Chesapeake back to the drawing board.

As much as Chesapeake struggled with lower volumes and weak prices, it still managed to cut its operating expenses for Q4 2016 by 58.4% from a year earlier to $2.3 billion. That helped the company to narrow its GAAP net loss to $741 million from $2.23 billion a year earlier.

The management also addressed the issue of declining volumes, saying that it will try to reverse the trend starting in the back half of the year.

Production target

Chesapeake Energy Corporation (NYSE:CHK) hopes to produce between 532,000 and 562,000 barrels of oil equivalent per day (boepd) in 2017 despite narrowing its capital budget for the year as part of cost controls.

The management expects to cut the company’s debt by $2 – $3 billion over the next few years. Asset sales are expected to contribute toward the cost reduction.

Stock movement

Chesapeake Energy Corporation (NYSE:CHK)’s feeble quarterly earnings combined with concerns over the company’s huge debt sent the shares down nearly 2.9% to $5.75 in the last session. The stock is down more than 18% so far in 2016, but has gained more than 180% over the last 12 months.

2/23/2017
Ticker Symbol CHK
Last Price a/o, 4:02PM EST  $                       5.75
Average Volume (mlns) 44.58
Market Cap (blns)  $                  5.09
Sales (mlns) $9.93
Shares Outstanding (mlns) 884.48
Share Float (mlns) 878.95
Shortable Yes
Optionable Yes
Inside Ownership 1.00%
Short Float 12.67%
Short Interest Ratio 2.50
Quarterly Return -9.59%
YTD Return -18.09%
Year Return 113.75%

I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 96 hours. All information, or data, is provided with no guarantees of accuracy.

About the author: Monica Gray has an undergraduate degree in Accounting and an MBA – earned with Honors. She has six years of experience in the financial markets and has been a securities analyst for the past two years.

Square Inc (NYSE:SQ)’s Stock Break Out Explained

Square Inc (NYSE:SQ)

How did Square Inc (NYSE:SQ) manage to hold on to its Wednesday gains and scale higher to a new 52-week peak on Thursday? The answer can now be provided. The company’s 4Q16 beat expectations and most analysts who have reviewed the results think the company is moving toward more growth.

Shares of Square settled at $17.15 on Thursday, after gaining more than 14%. Earlier, the stock rose to a new 52-week high of $17.75. Square is up more than 25% year-to-date, and has gained more than 72% over the last one year.

Q$ 2016 top expectations

Square Inc (NYSE:SQ) generated revenue of $452 million, up 21% year-over-year. EPS loss of $0.04 narrowed significantly from EPS loss of $0.34 a year earlier. Both the top and bottom line figures beat the consensus estimates that called for EPS loss of $0.09 and revenue of $450 million.

Square’s gains in the quarter were supported by robust growth in the company’s merchant payment processing service. The company processed nearly $50 billion in payments on behalf of merchants, up 39% compared to a similar quarter a year earlier. Square takes a 2.75% cut in payments it processes. The topline growth was also supported by success in newer businesses such as business credit line Square Capital. The company extended $798 million in business loans in 2016.

Upbeat outlook

On top of strong quarterly results for Q4 2016, Square Inc (NYSE:SQ) also issued upbeat guidance for 2017. The company expects revenue of $2.15 billion for the year, suggesting nearly 25% growth from the prior year.

To reach its revenue target in 2017, Square intends to introduce its services to all its customers. New products are also expected to drive growth in the coming years.

More growth awaits Square

Several rating firms have weighed in on Square Inc (NYSE:SQ) since the company reported Q4 2016 results on February 22. While the majority of the analysts think that the company’s prospects are bright, at least one feels that Square’s continued loss-making is dangerous for its future.

RBC Capital Markets analysts maintained their OUTPERFORM rating on Square stock, but raised their price target on the stock from $17 to $18. Pacific Crest analysts made a similar move by keeping their OVERWEIGHT rating but hiking their price target to $18 from $17.

Mizuho Securities analysts are a bit more optimistic, reiterating a BUY rating and hiking their price target to $19 from $16. However, SunTrust analysts are more cautious with their recommendation of Square, choosing to maintain a HOLD rating on the stock at a price target of $16 – up from $13.

2/23/2017
Ticker Symbol SQ
Last Price a/o, 4:02PM EST  $                       17.15
Average Volume (mlns) 4.48
Market Cap (blns)  $            5.80
Sales (blns) $1.63
Shares Outstanding (mlns) 338.02
Share Float (mlns) 162.82
Shortable Yes
Optionable Yes
Inside Ownership 1.00%
Short Float 6.35%
Short Interest Ratio 2.31
Quarterly Return 40.34%
YTD Return 25.83%
Year Return 73.41%

I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 96 hours. All information, or data, is provided with no guarantees of accuracy.

About the author: Monica Gray has an undergraduate degree in Accounting and an MBA – earned with Honors. She has six years of experience in the financial markets and has been a securities analyst for the past two years.

What Should You Look For In Exelixis, Inc. (NASDAQ:EXEL)’s 4Q Earnings?

Exelixis, Inc. (NASDAQ:EXEL)

Exelixis, Inc. (NASDAQ:EXEL) is scheduled to release its Q4 2016 results on February 27 and Wall Street has already lined up its expectations for the quarter. The stakes seem to be high for the company given its mixed track record of earnings performance over the last several quarters.

Analysts on the average are expecting Exelixis to post EPS loss of $0.01 on revenue of $64.9 million in 4Q16. Exelixis reported EPS loss of $0.04 on revenue of $62.2 million in the last quarter, topping the consensus that called for EPS loss of $0.13 on revenue of $42.9 million. Exelixis’ earnings have topped expectations three times in the last four quarters.

While investors will be looking to see if Exelixis beats expectations in Q4 2016, significant attention will likely be on the company’s drug called Cabometyx (cabozantinib). The product has a potential to transform Exelixis’ financial performance.

Cabometyx is approved in the US and the EU as a treatment for a certain cancer indication in certain patient classes. Exelixis, Inc. (NASDAQ:EXEL) has also inked several strategic deals involving development and commercialization of Cabometyx. The company is working to extend the drug’s treatment label so that it can generate even more revenue from it.

Regulatory approvals

The FDA approved Cabometyx as a treatment for advanced RCC (renal cell carcinoma) for patients who have undergone prior treatment with different therapy. The drug is approved in the EU for a similar condition in the same class of patients.

Exelixis, Inc. (NASDAQ:EXEL) has been working to expand the drug’s treatment mandate, and it plans to submit supplemental applications for regulatory review that could end with Cabometyx being recommended for a first line treatment for advanced RCC patients.

Exelixis sees huge opportunity for its compound cabozantinib, which it believes could treat several other types of cancers beyond the ones it has been approved to tackle. As such, the company is collaborating with a number of leading pharmaceutical companies to develop and commercialize the compound.

Strategic partners

Exelixis’ partners in developing and commercializing cabozantinib include Merck & Co., Inc. (NYSE:MRK), Bristol-Myers Squibb Co (NYSE:BMY), Takeda Pharmaceutical Co Ltd (ADR) (OTCMKTS:TKPYY), DAIICHI SANKYO COM NPV (OTCMKTS:DSKYF) and Ipsen. If cabozantinib meets expectations as agreed by these partners, Exelixis would be in for milestone and royalty payments, giving a boost to its topline.

But for anything that goes through regulatory approval, nothing is guaranteed, which means that Exelixis could still miss the payments promised under the cabozantinib deals. In the case of Takeda, Exelixis gave the company exclusive rights to commercialize Cabometyx in Japan. In return, Exelixis is receiving $50 million in upfront payment and is also eligible to receive up to $95 million in milestone payments.

Stock movement

Shares of Exelixis, Inc. (NASDAQ:EXEL) retreated more than 3.9% to $21.73 in the last session. However, the stock is up more than 45% year-to-date and more than 430% over the last one year.

2/23/2017
Ticker Symbol EXEL
Last Price a/o, 4:02PM EST  $                       21.74
Average Volume (mlns) 5.42
Market Cap (blns)  $               6.10
Sales (mlns) $123.80
Shares Outstanding (mlns) 280.63
Share Float (mlns) 260.59
Shortable Yes
Optionable Yes
Inside Ownership 0.80%
Short Float 6.06%
Short Interest Ratio 2.91
Quarterly Return 26.62%
YTD Return 45.81%
Year Return 461.76%

I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 96 hours. All information, or data, is provided with no guarantees of accuracy.

About the author: Monica Gray has an undergraduate degree in Accounting and an MBA – earned with Honors. She has six years of experience in the financial markets and has been a securities analyst for the past two years.

What If The Government Loosened Its Grip On Federal National Mortgage Association Fannie Mae (OTCMKTS:FNMA)?

Federal National Mortgage Association Fannie Mae (OTCMKTS:FNMA)

Federal National Mortgage Association Fannie Mae (OTCMKTS:FNMA), also known as Fannie Mae, and Federal Home Loan Mortgage Corp (OTCMKTS:FMCC), also known as Freddie Mac, have been under the control of the government since 2008 when they were bailed out. What that means is that shareholders in the mortgage companies do not see a profit. Instead, the companies funnel all their profits to the US Treasury, and that has been a subject of serious legal dispute between shareholders and government on opposing sides.

Fannie and Freddie are turning nearly $10 billion in dividends to the government in March from their profits in the December quarter, or 4Q16. Fannie posted a $5 billion profit in the quarter and said it will send $5.5 billion to the Treasury, while Freddie generated $4.8 billion in profit in the quarter and said it will funnel $4.5 billion in dividends to the government.

If the government didn’t have a tight grip on these mortgage giants, shareholders would have benefited from these hefty dividend payouts. Instead, the best shareholders can come to enjoy Fannie and Freddie’s success is to profit from appreciation in their stocks as has happened every time they reported strong earnings results.

Fannie gives Treasury $160 billion

Federal National Mortgage Assctn Fnni Me (OTCMKTS:FNMA) posted net income of $12.3 billion in 2016, bringing its positive net worth at the end of the year to $6.1 billion. In the first nine months of 2016, Fannie paid $9.6 billion in dividends to the government. Combining the newly declared dividend of $5.5 billion to be released in March, the company has sent a total of $160 billion to the government since it returned on its feet after being bailed out in 2008.

Strengthening the business

The management of Fannie has recently focused on strengthening the company’s business model, especially reducing risk to taxpayers. Similar efforts are being made at Freddie.

As such, the mortgage giants reported lower serious delinquency rates at the end of 4Q16. For Federal National Mortgage Association Fannie Mae (OTCMKTS:FNMA), single-family delinquency rate dropped to 1.2%, while Freddie reported delinquency rate of 1%. Nationwide single-family delinquency was 2.96% in 3Q16, according to the Mortgage Bankers Association data. The association’s 4Q16 data isn’t out.

Fannie and Freddie’s upbeat 4Q16 and 2016 results showing improving fundamentals in the housing market.

Stock movements

While shareholders may be sitting out of profits from Fannie, strong performance by the company coupled by hopes that investors may someday find a way to share in future profits could continue to lift the stock.

Shares of Federal National Mortgage Association Fannie Mae (OTCMKTS:FNMA), have risen more than 117% year-to-date and are up more than 110% over the last 12 months. Shares of Freddie, on the other hand, are up more than 100% for both year-to-date and the last 12 months.

I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 96 hours. All information, or data, is provided with no guarantees of accuracy.

About the author: Monica Gray has an undergraduate degree in Accounting and an MBA – earned with Honors. She has six years of experience in the financial markets and has been a securities analyst for the past two years.

Can Sport Endurance Inc (OTCMKTS:SENZ) Fix Its Cash Shortage Problem?

Sport Endurance Inc (OTCMKTS:SENZ)

Sport Endurance Inc (OTCMKTS:SENZ) has a cash problem. When the company reports 4Q16 results on March 9, the quality of its balance sheet will come under sharp focus of investors for signs of what might be lying ahead for the dietary supplements company.

In its last quarterly report, Sport Endurance generated revenue of $230, and posted a net loss $200,563, wider than $18,686 net loss in year earlier. The company closed the quarter with cash and equivalents of $964, down from $10,197 in the prior quarter. Total assets shrank to $16,176 from $16,640 in the prior, while liabilities ballooned to $791,062, from $590,963.

The quarter left the company with more than 1.5 million in accumulated net losses and working capital shortfall of $774,886. With liabilities exceeding assets and Sport Endurance Inc (OTCMKTS:SENZ) facing a working capital shortage, the management sounded the alarm over the company’s ability to continue as a going concern.

Management express hope

However, the management expressed hope that options still exist to keep the company in operations, or at least, enter a deal that would maximize shareholder value. Among the options the management is pursuing is seeking business ventures that would increase the revenue that the company generates and provide cash flow to run the operations.

Additionally, the management is seeking deals that would yield cash injection to fund operations. However, the management still cautioned that there was assurance that a deal to save the company would materialize.

Debt Financing

In seeking additional capital to plug the working capital deficit and meet other operational needs, Sport Endurance Inc (OTCMKTS:SENZ) can try several options. One of the options is to issue new debt. However, the problem with seeking debt financing is that Sport Endurance’s already highly leveraged balance sheet could turn off prospective lenders or force the company to accept debt financing at a higher interest rate.

The company’s interest expense at the end of the last quarter was $183,705, rising sharply from $2,253 a year earlier.

Equity financing

If debt financing proves difficult, Sport Endurance Inc (OTCMKTS:SENZ) could sell new shares to the public or selected investors. In that cash, the company would get a financial shot in the arm without risking driving up its interest expenses. However, equity issuance also carries a problem as it would dilute value for existing shareholders. For investors with a long-term outlook, that would be a lesser concern compared to debt that would chain Sport Endurance to expensive repayments.

The other option for Sport Endurance Inc (OTCMKTS:SENZ) to cope with its cash problem is cost-cutting so that it saves money to invest in growth. In a move reminiscent of cost pruning, shareholders voted to restructure the company’s board of directors so that the board was left with only one director.

However, there is no guarantee Sport Endurance Inc (OTCMKTS:SENZ) would succeed if it pursues any or all of these survival options.

Shares of Sport Endurance Inc (OTCMKTS:SENZ) rose 1.7% to 1.80 in the last session. The stock is down 8.6% year-to-date, and it is up more than 250% over the last one year.

I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 96 hours. All information, or data, is provided with no guarantees of accuracy.

About the author: Monica Gray has an undergraduate degree in Accounting and an MBA – earned with Honors. She has six years of experience in the financial markets and has been a securities analyst for the past two years.

Why CombiMatrix Corp (NASDAQ:CBMX) Shone in 4Q16

CombiMatrix Corp (NASDAQ:CBMX)

CombiMatrix Corp (NASDAQ:CBMX) released its 4Q16 and full-year 2016 results on Wednesday 22, posting improvements in revenues and earnings. The company also dropped a hint on how it intends to execute in 2017 and the years to come.

Increase in test volumes, customer gains and higher average test prices yielded massive gains for CombiMatrix in both 4Q16 and 2016, the management disclosed.

“I’m proud to report a strong finish to 2016 with substantial improvements in key financial and operating metrics as we continue to make progress toward our stated goal of sustained profitability,” commented CombiMatrix’s CEO Mark McDonough.

What happened in 4Q16?

CombiMatrix Corp (NASDAQ:CBMX) grew its total revenue in 4Q16 by 32% year-over-year to $3.5 million. The gain was supported by an 8% increase in test volume to 2,770 tests in the quarter.  Customer gains also drove the company’s topline as the number of billable customers increased 10% to 261.

Continued efficiency drive also bore fruits for the company during the latest quarter. CombiMatrix Corp (NASDAQ:CBMX) reported gross margin of 58.4% from 46.5% in the comparable quarter a year earlier.  Those cost control efforts yielded EPS of $0.22 in the latest quarter, sharply up from EPS loss of $2.02 a year earlier.

How about full-year 2016?

Revenue of $12.9 million for the year increased 28% over the prior year’s figure.

CBMX’s cost control measures didn’t pay off as the company managed to shrink its EPS loss to $3.27, a steep decline from $9.22 in the previous year. The company finished the year with cash and equivalents of $3.7 million, down slightly from $3.9 million in the prior year.

What next for CombiMatrix?

The management of CombiMatrix Corp (NASDAQ:CBMX) has sounded optimistic as it expects the company to continue growing in 2017. According to CEO McDonough, this year they will seek to capitalize on the favorable market conditions. The management also believes the company can capitalize on its market leadership to generate more value for shareholders in 2017 and beyond.

Why CombiMatrix may not get what it wants

However, tough competition in the reproductive health diagnostics market could force CombiMatrix Corp (NASDAQ:CBMX) to spend more on innovation to differentiate its products, leading to a hit on profits. Additionally, tough competition could lead to the company spend more on marketing to promote its products and undo the competition.

CombiMatrix Corp (NASDAQ:CBMX) is wresting for diagnostic spending against Laboratory Corp. of America Holdings (NYSE:LH), Quest Diagnostics Inc (NYSE:DGX) and NeoGenomics, Inc. (NASDAQ:NEO).

Shares of CombiMatrix Corp (NASDAQ:CBMX) are up more than 52% so far this year, but they are down about 25% since a year ago.

2/22/2017
Ticker Symbol SINO
Last Price a/o, 4:02PM EST  $                       4.10
Average Volume 292,180
Market Cap (mlns)  $                  10.29
Sales (mlns) $12.00
Shares Outstanding (mlns) 2.51
Share Float (mlns) 2.19
Shortable Yes
Optionable No
Inside Ownership 2.00%
Short Float 12.15%
Short Interest Ratio 0.91
Quarterly Return 51.85%
YTD Return 54.72%
Year Return -1.91%

I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 96 hours. All information, or data, is provided with no guarantees of accuracy.

About the author: Monica Gray has an undergraduate degree in Accounting and an MBA – earned with Honors. She has six years of experience in the financial markets and has been a securities analyst for the past two years.