Companies featured in this edition of the newsletter: CHIP, ENZ, GERS, IWEB, OMCM, ONEZ, XSNX
Markets hit fresh highs for ‘09 yet again last week, as the first round of earnings helped to assuage investor concerns that operating results would underpin robust gains in equities this year. All told, the Dow gained 130 points to end the week at 9995 after briefly cracking the 10,000 mark, gaining 1.3% on the week and extending its gains to 13.9% on the year. The Nasdaq gained 0.8% on the week to close at 2156, up 36.8% on the year, while the S&P 500 and Russell 2000 gained 1.5% and 0.2% respectively, bringing their YTD totals to 20.4% and 23.4%.
Earnings stole the spotlight last week as things got off to a strong start early with JP Morgan handily beating expectations calling for $0.51 per share, reporting earnings of $0.82 per share. Citigroup and Goldman Sachs reported similarly upbeat results, but were not rewarded in kind as selling pressure resulted in losses on the day despite the earnings beats. Google however was rewarded by the market for besting EPS estimates, coming in at $5.89 versus expectations for $5.42; shares gained 3.75% on Friday following the announcement.
Commodity prices also served as a major driving factor this week as weakness in the dollar, which hit a fresh 52 week low, helped boost commodities to record levels. Gold managed to continue its run, hitting an all time high of $1070.20 an ounce and oil surged to $78.75 per barrel, its highest levels of ‘09.
Economic data was mostly overshadowed by earnings, but retail sales managed to provide a positive surprise, declining by a modest 1.5%, versus expectations for a drop of 2.5%. Initial jobless claims also managed to moderately outperform expectations, coming in at 514,000, beating estimates for 520,000.
What should investors look for this week? Earnings will be at the forefront of investors’ collective attention again this week as we continue one of the most highly anticipated earnings seasons in recent memory. Things kick off on Monday afternoon with Apple (NASDAQ: AAPL) and Texas Instruments (NYSE: TXN) reporting after the close. On Tuesday morning, expect reports from Caterpillar (NYSE: CAT), Coca-Cola (NYSE: KO), Lockheed Martin (NYSE: LMT), and Pfizer (NYSE: PFE), with Yahoo! (NASDAQ: YHOO) reporting after the close. On Wednesday look for results from Boeing (NYSE: BA), Continental Air (NYSE: CAL), Eli Lilly (NYSE:LLY), McDonald’s (NYSE: MCD), Morgan Stanley (NYSE: MS), Northrop Grumman (NYSE: NOC), and Wells Fargo (NYSE: WFC), with Amgen (NASDAQ: AMGN) releasing results after the bell. Thursday, AT&T (NYSE: T), Bristol-Myers (NYSE: BMY), Dow Chemicals (NYSE: DOW), Delta Airlines (NYSE: DAL), Merck (NYSE: MRK), Phillip Morris (NYSE: PM), UPS (NYSE: UPS), US Airways (NYSE: LCC), and Wyeth (NYSE: WYE), all report before the bell. Amazon.com (NASDAQ: AMZN) and American Express (NYSE: AXP) release after the close on Thursday, and Honeywell (NYSE: HON) and Microsoft (NASDAQ: MSFT) round out the week before the bell Friday morning.
Economic releases for the week begin Tuesday morning with Building Permits and Housing Starts for September, released along with PPI and Core PPI, also for September at 8:30am. Weekly crude inventories are due out at 10:30am Wednesday, followed by the Fed’s Beige Book at 2:00pm that same day. Thursday brings weekly initial jobless claims and continuing claims at 8:30am, followed by Leading Indicators for September at 10:00am along with the FHFA Housing Price Index for August. Existing Home Sales for September finish up the week’s activity at 10:00am Friday.
There are no conferences of note scheduled for this week due to earnings season.
Enzo Biochem (NYSE: ENZ), a leading vertically integrated biotechnology company engaged in the research, development, manufacture and licensing and marketing of innovative health care products, technologies and services based on molecular and cellular techniques, reported results for its fourth fiscal quarter ended July 31, 2009 last week. Among the highlights were a 16% increase in total operating revenue, to $24.5 million, and a 19% increase in gross profit, to $10.6 million, compared to the corresponding year ago period. The company attributes the increased revenues to greater product sales and acquisitions at its Enzo Life Sciences subsidiary, in addition to higher testing throughput at its Enzo Clinical Labs division. Enzo reported a net loss of $5.3 million or ($0.14) per share for the period, compared to a year ago net loss of $3.3 million, or ($0.09) per share; results were impacted by higher selling, general and administrative expenses amounting to 48% of net operating revenues, compared to 42% a year ago. The company remains in a strong financial position, with no debt, working capital of $60.5 million and cash and short term investments totaling $50.2 million at the end of the period. In other news last week, the company announced that its Life Sciences subsidiary released a new catalog dealing with Epigenetics & Chromatin Modification at the Society for Neurosciences’, Neuroscience 2009 conference, on October 17, in Chicago, Illinois. The catalog provides a portfolio of tools relating to histone- and DNA-modifying enzymes, including enzymes for lysine acetylation/deacetylation (HATs, HDACs and sirtuins), protein methylation/demethylation, DNA methylation and telomerases. Shares lost fifty one cents on the week to close at $6.81.
Verichip Corporation (NASDAQ: CHIP), a provider of radio frequency identification systems for healthcare and patient-related needs, which recently announced its intention to acquire identity security provider Steel Vault to form PositiveID Corp, a provider of identification technologies and tools for consumers and businesses, provided further scientific and technological details on the development of Phase II of its in vivo glucose-sensing RFID microchip. The company expects that Phase II trials will be completed in the second quarter of 2010 and will build on Phase I, which successfully demonstrated the bench-top format application of the glucose-sensing system to the detection of glucose levels. The company plans to focus on the development of a bench scale system prototype that incorporates all of the critical components necessary to demonstrate glucose sensing in the presence of model blood and interstitial fluid matrices; they expect that the Phase II trial will result in a fully functional, bench scale prototype of the glucose sensing system. In other news last week, the company announced that it will host an event for the medical, patient and investor communities on October 22, 2009, in New York to unveil details of their virus triage detection system for the H1N1 virus and Phase II development of the aforementioned in vivo glucose-sensing RFID microchip. The companies will also provide a product demonstration of the virus triage detection system currently under development. Shares lost fourteen cents on the week to close at $1.97.
Greenshift(OTCBB: GERS), a company that develops and commercializes clean technologies that facilitate the efficient use of natural resources, announced last week that it has been granted U.S. Patent No. 7,601,858, titled “Method of Processing Ethanol Byproducts and Related Subsystems” for the extraction of corn oil. The patent covers processes for recovering corn oil by evaporating, concentrating and mechanically processing thin stillage, a precursor to the distillers grain co-product of corn ethanol production. The patent allows the company to tap into a new reserve of inedible crude corn oil, with an estimated industry-wide output of about 20 million barrels per year. The corn oil is a valuable second generation feedstock for use in the production of biodiesel and renewable diesel, thereby enhancing total fuel production from corn and increasing ethanol plant profits. In related news last week, the company has filed legal action in the United States District Court against GEA Westfalia Separator, Inc. and others in the industry for infringing on GreenShift’s recently awarded patent covering corn oil extraction technology. The suit alleges that Westfalia and others in the industry infringed on the aforementioned patent and that Westfalia solicited several industry members into using the company’s now patented technology well after the patent applications were published. Shares remained unchanged at under a penny on the week.
Volume Alert: Shares of IceWeb (OTCBB: IWEB), a leading provider of storage solutions and on-line cloud computing application services, gained 64% on over four times average volume last week, following the announcement that it will be exhibiting in the GEOINT 2009 Symposium, the preeminent event of the year for the defense, intelligence and homeland security communities. IceWEB’s equipment will also be prominently displayed in six partners’ booths throughout the show, and will include the MLP III, their Iplicity Enterprise suite, and a new, yet to be announced product which will be unveiled at the Symposium. Shares gained just over five cents on the week to close at $0.115.
OmniComm Systems, Inc. (OTCBB: OMCM), a leader in integrated electronic data capture solutions for clinical trials, was the subject of a research update from analysts at Emerging Growth Equities that was released last week. In the report, analysts reiterated their Buy rating and put a price target of $0.40 on the shares, which are currently trading at $0.20. Analysts cited, “recent contract wins reflect[ing] OmniComm’s strengthening competitive position and some improvement in the macro environment, in addition to recently completed acquisitions which expanded both the customer base and breadth of available services as reasons for the rating.” In other news last week, the company announced that its new SDTM solution is ready ahead of schedule, and is available to its customers for deployment and implementation into clinical studies. The SDTM update was developed for OmniComm’s flagship EDC product, TrialMaster, and will allow for mapping and exporting of data directly into the CDISC SDTM format, ensuring an accelerated pathway towards electronic submission of clinical data. The update makes OMCM the first EDC company to leverage all of the industry leading reporting standards in a single solution. Shares lost four cents on the week to close at $0.20.
ONE Holdings (OTCBB: ONEZ), an investment company owning majority equity interest in core operating assets in Biotechnology located in the Asia Pacific region, announced last week that its Green Planet Bioengineering Co. Subsidiary has filed a patent application relating to the process and application of extracting Isofraxidin and Flavonoid compounds synchronously from Sarcandra Glabra, a plant native to China that possesses medicinal properties. The new process is expected to dramatically improve the extraction rate and medicinal yield, in addition to significantly increasing the company’s time to market in the high margin over the counter business. The company plans to launch OTC products by the fourth quarter of this year and expects that the product expansion will result in higher net profit. Shares gained a penny on the week to close at $1.24.
Volume Alert: Shares of XsunX (OTCBB: XSNX), a developer of advanced, thin-film photovoltaic (TFPV) solar cell technologies and manufacturing processes, surged over 46% on almost four times average volume last week, following the initiation of coverage by analysts at Beacon Equity research. Coverage was initiated with a Speculative Buy rating and a price target of $2.90 on the shares that are currently trading at just over $0.19. Analysts speculated that the company’s “new technology may produce a replacement for silicon wafers as roughly 80% of solar panels are silicon-based” at half the cost. The company’s CIGS wafers could be integrated into solar panels, adapted to a variety of building materials and even used in consumer products. The report also provides an update on XSNX’s development progress, stating that the company “is currently focusing its development efforts on designing an efficient evaporation source for use in commercial-scale manufacturing of CIGS layers. These design and engineering efforts began in April 2009. XSNX anticipates performing tests of evaporation source designs and adapting these sources to HDD equipment over the next nine to 10 months.” Shares gained just over six cents on the week to close at $0.191.