Investment "Logic"

On Friday, Honeywell announced results for fourth quarter and fiscal year 2017.  As expected, results were mostly spectacular.  Earnings came in at $1.85 on organic sales of 6%.  Revenues were $10.8B while delivering free cash flow (FCF) of 123%.  They repurchased 10.3M shares and also increased the dividend by 12% during the quarter.  These results mostly topped analyst expectations where earnings beat by a penny and revenues beat by around $90M.  Many analysts were hoping for 7% organic growth, though, which was the one bad mark for the company.  That said, the company projected only 2% - 4% organic growth, so they well exceeded their own expectations.  It is important to note that after all of these numbers, the company did report a loss of $3.8B due to provisions for U.S. Tax reform.  But these same reforms also allowed the company to adjust earnings guidance for 2018 up to $7.75 - $8.00, which is in line with my personal estimates of...

Before the opening bell yesterday morning, Honeywell announced the results of its portfolio analysis, an analysis that was spurred by activist investor pressure.  Third Point's Dan Loeb challenged Honeywell, shortly after new CEO Darius Adamczyk took the helm, that the company isn't doing enough to capture shareholder value and that they should spin off the Aerospace division.  After the company has done deep analysis of their portfolio of products, they agreed to do not 1, but 2 spinoffs from the company.  Neither spinoff, however, is the one that Third Point asked for.  Instead, the company is going to spin off their homes business - essentially the HVAC and fire protection products which they have (thermostats, filters, other equipment for home and businesses) as one business.  This business will be worth approximately $4.5B.  The second spinoff will be their transportation business, which is primarily rooted in their low-margin, but highly success...

I wanted to provide a quick update after yesterdays chilling move in the stock of Ionis Pharmaceuticals.  The stock, which was down over 11% at one point during the day, closed down just over 8%.  There weren't any announcements from the company, its newest subsidiary Akcea (yeah, I have some catching up to provide here), or the FDA.  The cause for the swoon were the explosive earnings results that came out of Biogen Idec, which Ionis partnered with on the creation of the SMA therapy Spinraza.  Analyst expectations for sale of the drug were at $70M for the quarter, but the real results were almost three times that, coming in at $203M.  The partnership deal between Biogen and Ionis provides a royalty fee of between 11 and 13 percent of those revenues, meaning that we can expect the company to announce income between $22M and $26M for this one therapy alone - much more than was expected for the quarterly results.  The stock surged in the pre-market hours ...

Notes: Stock Ratings: 1 = buy at current stock prices, 2 = buy on a 5-10% dip in stock price, 3 = sell on a 5-10% increase in stock price, 4 = sell at current stock prices to raise cash.  Ratings are based upon 12-18 month outlook on stock direction and not necessarily related to moves I make due to financial positioning. It's been a couple weeks since Ionis reported fourth quarter and fiscal year earnings results.  And the two weeks since has been a whirlwind of news to process.  As such, I'll take some time to talk about earnings, but also the events since that earnings call to see if I can place where everything really is at.   Starting with the earnings report, as Ionis pre-announced, they were well ahead of guidance and expectations, primarily due to the FDA approval of SPINRAZA and the resulting milestone payment from Biogen.  Revenues came in at $160.3 million - over 50% above expectations of $99.3M.  The resulting earnings of $0.26 which ...

Notes: Stock Ratings: 1 = buy at current stock prices, 2 = buy on a 5-10% dip in stock price, 3 = sell on a 5-10% increase in stock price, 4 = sell at current stock prices to raise cash.  Ratings are based upon 12-18 month outlook on stock direction and not necessarily related to moves I make due to financial positioning. There has been a blast of conference calls and announcements from Ionis Pharma over the last few days, so I think it's time to recap and assess what we've learned.  First up is the conference call that was held on January 5 to discuss the company's pipeline.  I'm not going to spend a lot of time here because I don't think it deserves much.  This was essentially a recap of everything we've seen and heard over the course of 2016 in regards to where their major therapies are.  Much of the focus was placed on Volanaosorsen, which will likely go commercial in the first quarter this year to treat people with FCL  In short, everything is on ...

Notes: Stock Ratings: 1 = buy at current stock prices, 2 = buy on a 5-10% dip in stock price, 3 = sell on a 5-10% increase in stock price, 4 = sell at current stock prices to raise cash.  Ratings are based upon 12-18 month outlook on stock direction and not necessarily related to moves I make due to financial positioning. Yesterday, we heard a slew of news come from Ionis Pharmaceuticals, so I thought it might be worth taking a moment to look at the information and determine if it has an effect on the stock's performance or my thesis.  There were 3 major press events today.  First, this morning they announced the results from their COMPASS phase 3 study for Volanesorsen.  Then after the closing bell they announced the advancement into the pre-clinical phase of an unnamed cardiovascular disease treatment.  Finally, CEO Stanley Crooke appeared on CNBC's "Mad Money" to talk about his company and their announcements.   First up is the Volanesorsen de...

Notes: Stock Ratings: 1 = buy at current stock prices, 2 = buy on a 5-10% dip in stock price, 3 = sell on a 5-10% increase in stock price, 4 = sell at current stock prices to raise cash.  Ratings are based upon 12-18 month outlook on stock direction and not necessarily related to moves I make due to financial positioning. On Friday, Honeywell shared their 2017 forecast with the investing community.  The truth of the matter is that the results felt mixed.  In fact, initial headlines of the press release was strongly negative.  The company has reiterated their fourth quarter results for 10% earnings growth and a target of $1.74 for the quarter ($6.53 for the year).  While this was within the range, it was at the low end of the range, which is somewhat disappointing.  Additionally, they lowered sales and earnings expectations for 2017.  Reported sales will be down 1%-2% primarily due to divestitures after gains from acquisitions.  Earnings a...

Notes: Stock Ratings: 1 = buy at current stock prices, 2 = buy on a 5-10% dip in stock price, 3 = sell on a 5-10% increase in stock price, 4 = sell at current stock prices to raise cash.  Ratings are based upon 12-18 month outlook on stock direction and not necessarily related to moves I make due to financial positioning. Today it was announced that Biogen is going to exercise its option to commercialize Nusinersen globally and is paying Ionis $75 million for the rights, with potential for $150M more in future milestones with a mid-teens royalty fee for future sales.  This is all a result of the drug reaching a primary endpoint in its ENDEAR, phase 3, study with an acceptable safety profile.  This points to significantly positive results that are so valuable, they intend on switching control patients over to the drug as soon as possible to get them on the therapy.   This is big news for Ionis, who has been plagued by a beleaguered biotech sector and alarmi...

Notes: Stock Ratings: 1 = buy at current stock prices, 2 = buy on a 5-10% dip in stock price, 3 = sell on a 5-10% increase in stock price, 4 = sell at current stock prices to raise cash.  Ratings are based upon 12-18 month outlook on stock direction and not necessarily related to moves I make due to financial positioning. Yesterday Ionis Pharmaceuticals posted an update on its 2 Phase 3 studies regarding their anti-sense therapy for TTR.  In short, the FDA put a hold on the start of the study for the FCA version of the therapy (for heart-related TTR), which is being operated by Glaxo-Smith Klein (GSK), while the FAP version (for neurological-related TTR) continues on its normal path.  This news event caused the stock to go down over 13% at one point yesterday before it closed down over 10%.  Today it was down another 2%, presumably related to this news.   Traditionally, an FDA hold is a bad thing for biotech companies as it indicates an issue in a tes...

Notes: Stock Ratings: 1 = buy at current stock prices, 2 = buy on a 5-10% dip in stock price, 3 = sell on a 5-10% increase in stock price, 4 = sell at current stock prices to raise cash.  Ratings are based upon 12-18 month outlook on stock direction and not necessarily related to moves I make due to financial positioning. I wanted to take a few minutes to provide an update after today's trading market results for Ionis Pharmaceuticals, which fell a whopping 11.76%, though that was well off it's lows of over 15% down.  I spent free time today trying to understand what was going on.  No news was distributed, but all of Biotech was taking a hit in the 2% - 5% range, with the IBB pushing down near it's August 24 lows.  It wasn't until after the close that news releases started to come out and help shed light on what else was pushing things down.  As a part of their discussion at the JP Morgan healthcare conference, Ionis provided an update on their 2015 out...

Notes: Stock Ratings: 1 = buy at current stock prices, 2 = buy on a 5-10% dip in stock price, 3 = sell on a 5-10% increase in stock price, 4 = sell at current stock prices to raise cash.  Ratings are based upon 12-18 month outlook on stock direction and not necessarily related to moves I make due to financial positioning. The events over the course of this week is forcing me to go back and perform a review of this stock.  As of this writing, the stock has fallen almost 14.3% in the course of 4 trading days.  What's going on?  What are my risks?  Is this a buying opportunity or do I need to get out of Dodge?  I'm going to put my best effort forth to answer that. First, let's figure out what's put us in this position.  The first thing to note is that the stock closed at $9.68 on Tuesday.  It's now down about 10.7% since then ($1.04).  So while the primary market indicators are down to begin with, this stock had a particularly strong ...

Notes: Stock Ratings: 1 = buy at current stock prices, 2 = buy on a 5-10% dip in stock price, 3 = sell on a 5-10% increase in stock price, 4 = sell at current stock prices to raise cash.  Ratings are based upon 12-18 month outlook on stock direction and not necessarily related to moves I make due to financial positioning. Earlier this week, Home Deopt delivered what can only be called an incredible quarter.  The company had sales of $21.8B which turned into earnings of $1.35 per share.  This beat  EPS Estimates of $1.32 on revenues of $21.76B on a quarter that was expected to have harder compares.  Additionally, the key metric for retail - same store sales - was up 5.1% while the US same store sale results were up 7.3%.  These numbers are nothing to slouch at.  The home improvement segment of retail is clearly strong, whereas clothing and other retail appears to be suffering mightily.   With the third quarter's results in, they have als...

Notes: Stock Ratings: 1 = buy at current stock prices, 2 = buy on a 5-10% dip in stock price, 3 = sell on a 5-10% increase in stock price, 4 = sell at current stock prices to raise cash.  Ratings are based upon 12-18 month outlook on stock direction and not necessarily related to moves I make due to financial positioning. On Monday, Isis Pharma announced their third quarter results.  Losses per share came in at $0.30 and revenues were $49.1M.  This had earnings in line with estimates of   $0.31, while revenues were a little lighter than the estimated $52.9M.  Despite the inline to missed numbers, cash reserves increased $50M from the previous quarter, to $800M.  The stock, also, has launched like a rocket and you're looking at an investor trying to stop kicking himself for not following his own rules and buying the stock in the low $40s.  You can't say you had it right if you don't act, but you can certainly be greedy for not buying stock...

Notes: Stock Ratings: 1 = buy at current stock prices, 2 = buy on a 5-10% dip in stock price, 3 = sell on a 5-10% increase in stock price, 4 = sell at current stock prices to raise cash.  Ratings are based upon 12-18 month outlook on stock direction and not necessarily related to moves I make due to financial positioning. Cedar Fair announced their third quarter results on Thursday.  The recorded record revenues of $645M which generated EPS of $2.92.  In addition, they increased their quarterly payout by ten cents, which is a rather significant increase in shareholder distribution.  EPS was a bit below analyst estimates of $3.46 due to currency translation and increased spending, while revenues beat expectations of $633.34M.  This is where EPS is hard to leverage as a gauge for company performance due to the heavy investments that take place to generate revenues.  In these situations, EBIDTA (Earnings Before Interest, Depreciation, Taxes, and Amort...

Notes: Stock Ratings: 1 = buy at current stock prices, 2 = buy on a 5-10% dip in stock price, 3 = sell on a 5-10% increase in stock price, 4 = sell at current stock prices to raise cash.  Ratings are based upon 12-18 month outlook on stock direction and not necessarily related to moves I make due to financial positioning. Last week On Semi reported their third quarter results, posting $904.2M in revenues and $0.23 EPS.  Earnings were in line with expectations, while revenues were slightly below what was expected of the company.  Additionally, the company repurchased just over $100M worth of stock at a weighted repurchase price of $10.64. The quarter was relatively mixed, as there were unexpected pressures seen in the macroeconomic conditions.  China is a major geographical revenue source and slowdowns were seen there across all of the four business segments.  The fourth quarter isn't looking to be a any stronger as management sees the supply chain wor...

Notes: Stock Ratings: 1 = buy at current stock prices, 2 = buy on a 5-10% dip in stock price, 3 = sell on a 5-10% increase in stock price, 4 = sell at current stock prices to raise cash.  Ratings are based upon 12-18 month outlook on stock direction and not necessarily related to moves I make due to financial positioning. Going to my financial stock and finally reviewing their quarter now, we find that Citigroup had a decent quarter - especially when compared to almost all of the other institutional banks.  The company achieved earnings of $1.31 per share on revenues of $18.5B and the tangible book value increased to $60.07.  This is in comparison of earnings estimates of  $1.28 on revenues of $18.62B.  The miss on revenues is a factor, as top line misses do impact stock performance, however, this impact was also driven mostly from currency translation. Since I'm talking about this weeks after the event, I don't think there's really a lot of value in ...

Notes: Stock Ratings: 1 = buy at current stock prices, 2 = buy on a 5-10% dip in stock price, 3 = sell on a 5-10% increase in stock price, 4 = sell at current stock prices to raise cash.  Ratings are based upon 12-18 month outlook on stock direction and not necessarily related to moves I make due to financial positioning. So I way behind on my earnings analysis segments.  I'll try my best not to spout out the completely known information as best I can and keep these pointed and short.   A couple weeks back, Pepsico announced their third quarter earnings results.  Core earnings were $1.35 on revenues of $16.3B.  This handily beat estimates of $1.26 and $16.15B, respectively.  While the earnings number looks great, it's to be noted revenues are actually down 5% from last year due to currency conversion issues.  Venezuela has become such an impact that they are changing the accounting methods on it, as the country looks to confiscate the assets...