Firstly, let me just say that I am biased against this company as it was the 1st company that I ever traded and also my 1st loss trading stocks. I frankly don’t understand how or why a company with 1 product, that’s been around since the 1950’s, is off-patent, can keep growing at the rate they are. None the less they are growing and have been profitable for at least the last 3 years and the stock price continues to rise higher. So clearly I am missing something about this story.
The compounded quarterly revenue growth rate for the past 7 quarters (calculated from 8 quarters of data) is 7.11% and only 3.08% for the past 10 quarters (calculated from 11 quarters of data). Assuming a 28.42% annual growth rate of both Revenues and Earnings here are some valuations for QCOR.
Price to sales: 12.99
PSG (Price to sales growth): 4.57
Here are some notes I took while listening to the latest Conference Call.
- Firstly the stock is up 14.4% in the last week and up 20.2% in the last month. Their main business is the sale of Acthar for MS.
- They bought back 1 million shares in Q1.
- Only 500 neurologist are prescribing Acthar.
- Nephrotic Syndrome study published, will help sales force in promoting it to doctors.
- Steadily growing number of new and repeat customers of Acthar.
- They have doubled their sales force in Q1.
- 4,000 nephrologists in the US.
- In November new data will be presented at the annual nephrology meeting.
- Phase 4 study now underway, company sponsored study.
- Expect a specific release of an analysis of other off-label indications for Acthar.
- We are consistently executing on our “sell more Acthar strategy”.
- They don’t have a “poison pill”.
- If shareholders reject the new employee stock options plan, they will use that cash to pay a dividend.
- Employee options vest over 4 years.
Why I will short Questcor Pharmaceutical (QCOR) today.
I am going to fade the Stocktwits. Secondly, I am also feeling a bit bullish today on the over all market so I will buy some UPRO.
I will short $2,500 of QCOR with the option to short an additional $2,500 at my discretion and will try to capture 10% points of profit. Risk management: exit trade if it moves 5% against me.
On UPRO I will buy $2,500 shares with the option of buying another $2,500 shares intra-day. I will be looking to make 3% on this trade and will exit the trade if it moves 1% against me.
Average entry price on UPRO is $83
5/13/2011 10:08 AM 30 $83.60 $2,508.00 $83.60
5/13/2011 12:07 PM 31 $82.42 $2,555.02 $83.00
Short entry price on QCOR is $22.95
5/13/2011 11:05 AM 111 $22.95 $2,547.45 $22.95
P&L for the day:
bought 30 shares for $83.60 = $2,508 plus $4.99 commissions.
bought 31 shares for $82.42 = $2,555.02 plus $4.99
total = 2555.02+2508= $5,063.02 ; divided by 61 shares = 5063.02/61= $83.00 average entry price.
Closing price was 81.78 ; P&L = (81.78-83)*61= -$74.42
shorted 111 shares at $22.95 = $2547.45 plus $4.99 commissions.
closing price was 22.71 ; P&L = (22.95-22.71)*111= $26.64
bought 58 shares at $42.96 = $2,491.68 plus $4.99 commissions.
closing price was 43.15 ; P&L = (43.15-42.96)*58= $11.02
Totals (-4.99*4)+(-74.42)+26.64+11.02= -56.72
Although for some reason Investopedia says that I was down 56.74 today, that I lost an extra 2 cents. I have no idea why. Oh well, I’ll figure it out later.