I probably would have done the same if I had the funds.
It does seem a little obvious though. It's one of those situations where the rough calculations seem to make it look very cheap indeed. Which in itself, makes me wonder if there's not something going on in the background.
I only parsed the announcement quickly this morning, but I always ask more questions when I see the words 'competition' used by businesses with fairly decent ROE and/or profit margins.I wondered that too... But it's not like sales growth is negative, nor is the balance sheet risky even in the slightest (the only company I can think of with a decent business and more cash relative to market cap would be UOS)
On balance, the risks are quite low.
Have people lost their minds?
Take out excess cash and you're talking 12times earnings (approx.)
The company is still growing, and a fair chunk of marketing spend is discretionary.
I'm assuming it's Theraspheres. Not sure if there are others.Given the competition drug is relatively new, it is impressive to gain that much traction in a few months (cheaper, more effective or more marketing dollars?). Any idea on what the drug is?
They are investing more in sales effort yet getting weaker dose sales growth... so I'd think again if marketing spend is truely discretionary. There's also the mention of new competition in the market... which signals to me further that some marketing spend is "sustaining" expense.
The market is certainly edgy. There's simply been too many high expectation stocks issuing disappointing updates. It's the hangover from the "negative interest rate, buy-anything-with-any-growth" period we have had in 2016. Although to be frank SRX's valuation wasn't nearly as stratospheric as some of the others.
Remember the old saying that profit warning comes in 3's. This is number 2. So the opening price probably reflects the market pre-empting number 3.
P.S. Now just imagine the spectacular that'd be of a DMP or COH market update.
It's also a pizza place that needs a distribution/branding license to sell that brand of pizza in a jurisdiction. They're not due for renewal for a while, but imagine if they weren't renewed...And if DMP released something like this, the world would explode. Trading on ridiculous multiples for a pizza place...
a quick search suggests:
Regorafenib (Bayer)
Lonsurf (aka tipiracil from Taiho)
Approved in 2012 and 2015 respectively but a couple of studies released earlier this year. Add weight to the line in the report about clinicians waiting for OS data from SIRFLOX et al, as if the above two were waiting for study data it shows how quick the clinicians may move.
I'm assuming it's Theraspheres. Not sure if there are others.
It's probably a good thing I'm not treating patients!!I think if you gave someone radio-emobolization orally you'd probably kill them well before the spheres got to the liver.
It's Lonsurf.
SRX have handled expectations atrociously. The AGM was barely six weeks ago. Given how far into the first half we already were they should not have given such bullish dose sales estimates.
It's pretty apparent this info leaked too, given the weakness in the SP of late.
In summary, the salvage market has rapidly become much more competitive, and without OS data SRX is not able to move up the treatment chain. Management also seem to have been blindsided by Lonsurf's entry. It's been approved and for sale for barely 12 months, and has already had a noticeable effect on SRX sales. I'd take any dose sales estimate with a grain of salt, and I would not extrapolate it at all. SRX used to reassure us that if the trials were unsuccessful they'd still have the salvage market. To me, the trial results are now extremely important.
The lower bound of the FY estimate seems to imply dose sales could go backward in the 2H, doesn't it?
Well done for admitting that to yourself. I would probably have been in the same boat if I had the ability to act this morning.The more I read, the more I realise I don't know.
Sold my holding, writing it off as an ill-informed mistake. It was profitable, but that's beside the point.
Absolutely. December profit downgrades are always bad if the AGM was only a few weeks ago. Not to mention the MD sold about 80k shares last month...
May be. But aren't there public data available on these sort of stuff? Like a rebate schedule or something?
Well done for admitting that to yourself. I would probably have been in the same boat if I had the ability to act this morning.
I can smell litigation.
I've had a similar experience but with stocks I've looked at closely but not purchased have seen big share price growth.What's odd about this is I've done it 5 times (see something that looks cheap, buy, then realise I don't know enough), and 4 out of 5 times it has been profitable - talk about luck...
There's simply been too many high expectation stocks issuing disappointing updates. It's the hangover from the "negative interest rate, buy-anything-with-any-growth" period we have had in 2016
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