Monday’s Most Significant Movers & the Meaning to Such Movement

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The market fell nearly 0.50% on Monday after reaching multi-year highs. However, this period of profit taking did not slow a group of stocks that traded considerably higher behind numerous key developments. In this article I am looking at these stocks, determining why they moved, and how investors might want to play the news.

Company

Ticker

1/7/13 Performance*

Peregrine Pharmaceuticals

(NASDAQ: PPHM)

75.56%

VIVUS

(NASDAQ: VVUS)

7.56%

Molycorp

(NYSE: MCP)

7.48%

SolarCity

(NASDAQ: SCTY)

11.49%

Nationstar Mortgage

(NYSE: NSM)

12.73%

*Performance as of 1:05 PM ET, Monday

  • After one of the more volatile years in the history of biotechnology, shares of Peregrine rallied after the company said that data on its experimental cancer drug, bavituximab, was not completely compromised by errors in a mid-stage trial. According to the company, the errors were only in regards to the lowest dose of the drug; therefore much of its record setting results should stand legit. If you recall, the stock rallied to $5.50 after data suggested a near guaranteed approval, but then fell after the company announced problems with its study. This is major news for the company, but keep in mind, the company is still testing on foreign ground and has lost much of its funding. Therefore, I’d watch for financing at some point in the future, but then I’d think diligently about a potential investment.
  • After a near collapse in the valuation of VIVUS following disappointing early sales, the company now appears to be on the right track, seeing stronger sales growth. Its weight loss drug Qsymia climbed 68% month-over-month to nearly 13,000 scripts in December. This shows a favorable trend for the demand of this product, and seeing as how there are so many marketing restrictions, it’s a good sign that the company’s word of mouth strategy is working. Therefore, at $14.80 the stock looks very attractive and is apparently moving in the right direction, fundamentally.
  • After a horrible year in 2012, shares of Molycorp have gotten off to a good start in the new-year. On Monday it rose as China set its rare earth production quota at 46,900 metric tons. While this is still only half of 2012’s production, it’s better than expected. The stock had already priced in a worst case scenario therefore the stock was poised to rise. Investor Lawrence Balter added the stock to his list of 2013 underdogs to surprise, and quite frankly, I agree with him.
  • Shares of solar company SolarCity rose over 11% following the initiation of coverage by Credit Suisse with an “Outperform” rating and a $22 price target. The firm noted that the bullish outlook was due to the company’s rapid growth in the solar generation market and that certain incentives and pricing power make the stock attractive. The company is currently seeing top-line growth of more than 70% and trades at a price/sales of 8.48. Considering the company recently filed an IPO this valuation is not too expensive, and I think the firm’s call is reasonable and the price target highly likely.
  • Nationstar Mortgage rose as it was the main winner of the Bank of America settlement that was announced Monday morning. According to Nationstar, the company acquired $215 billion in loans from BofA; making its five day return near 25% as investors speculated and then reacted to the news. The loans acquired were far greater than investors expected and now extends the company’s exposure in the mortgage industry. The company is fundamentally attractive with high margins and solid growth. I think it’s definitely worth watching.

Each of these companies moved on different yet important catalysts. The news varied in terms of relevance for each company, but was worthy of the move that each stock saw on Monday. Therefore, investors should take some more time to properly assess each company, their stock’s positioning, and the long-term impact of the news that caused each of these stocks to rally on Monday.


BrianNichols has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. Is this post wrong? Click here. Think you can do better? Join us and write your own!

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