Alkermes Reports a Strong Third Quarter

Alkermes reported a third quarter loss of 11 cents per share, versus a 21 cent analyst consensus loss, on revenues of $125.6 million, versus consensus estimates of $113.94 million. These results were driven by a strong commercial portfolio with five key products, while its late-stage pipeline reflects a promising development strategy that could pay off long-term.

Analysts like Cowen believe that the strong pipeline will begin to be looked at next year as a potential acquisition candidate, while the company is on track to generate revenues of $500 million by 2013. Other analysts like Jeffries also increased their price targets on the stock, in this case, to $24.00 per share, which represents a 25.3% premium to the current market price.

Alkermes Pipeline Continues to Mature

Alkermes pipeline of commercial drugs continues to mature as well. In January, the company reported that the FDA approved Bydureon, the first once-weekly treatment for type 2 diabetes, which will be available in pharmacies nationwide this month. Analysts believe that this approval improves its pipeline visibility and should positive affect its valuation.

About Alkermes plc

Alkermes plc is a fully integrated, global biopharmaceutical company that applies its scientific expertise and proprietary technologies to develop innovative medicines that improve patient outcomes. The company has a diversified portfolio of more than 20 commercial drug products and a substantial clinical pipeline of product candidates that address central nervous system (CNS) disorders such as addiction, schizophrenia and depression. Headquartered in Dublin, Ireland, Alkermes plc has an R&D center in Waltham, Massachusetts and manufacturing facilities in Athlone, Ireland; Gainesville, Georgia; and Wilmington, Ohio. For more information, please visit Alkermes’ website at www.alkermes.com.

Earnings Miss Sends Shares Lower

Mr. Gerdes purchase comes just one day after Transcend Services reported fourth quarter earnings that were less-than-impressive to investors. The company reported fourth quarter earnings of 25 cents per share, versus a 35 cent analyst consensus, on revenues of $32.9 million, versus an analyst consensus of $34.6 million.

After the earnings were released, the stock fell by around 10% on Thursday and continued to trade at depressed levels on Friday. However, the firm attributed the lower-than-expected results to two unusual items, including M&A transaction costs and India restructuring costs that hit the bottom line, and may not be applicable in future quarters.

Long-term Results Remain In Tact

Despite some lackluster fourth quarter results, Transcend Services long-term figures remain largely in tact. The year ended December 31, 2011, the company generated revenues that increased 33% to $125 million and gross profits that increased 43% to $49.7 million. Moreover, the bookings made in 2011 should generate between $15 and $19 million in annual revenue.

The company’s cost savings efforts should also help profitability moving forward, according to a recent press release. For instance, the closure of its Delhi, India operations and reallocated work to their Bangladore center should improve quality and reduce costs, while realigned teams and capacity utilization should combine to further help improve margins.

About Transcend Services Inc.

Transcend Services is a leading provider of clinical documentation solutions for healthcare organizations. Our high-quality transcription services – along with our physician self-edit and template solutions, data extraction and reporting tools – provide critical data needed to document patient encounters and help drive clinical decision making. We provide our clients with exceptional quality, turnaround time and service so that they can focus on what matters most – their patients. For more information, visit www.transcendservices.com.

Second Quarter Results Beat Expectations

Last quarter, Bebe Stores reported earnings of 8 cents per share, compared to 7 cent consensus estimates, on revenues of $152 million, versus $146.81 million consensus estimates. The results marked an 11.6% improvement from the year-ago results, while margins improved from lower markdowns and positive occupancy leverage in its stores.

Meanwhile, the company sees its third quarter same-store sales in the mid-single digit range and plans to open three Bebe stores and four 2B stores throughout the rest of the year. In total, this is expected to utilize about $27 million in capital expenditures. Analysts believed that this figure was very reasonable and the market responded positively.

Investors Support the Growth Story

Bebe Stores has attracted investment from 13 hedge funds at the end of the third quarter, according to regulatory filings. These funds increased their holdings from $23.8 million to $34.3 million over the course of the third quarter and there’s little sign of any reversal. Major holders include Chuck Royce, Sandler Capital Management and Renaissance Technologies.

About Bebe Stores Inc.

bebe stores, inc. designs, develops and produces a distinctive line of contemporary women’s apparel and accessories, which it markets under the bebe, BEBE SPORT, bbsp and 2b bebe brand names. bebe currently operates 251 stores, of which 208 are bebe stores, including the on-line store bebe.com, and 43 are 2b bebe stores, including the on-line store 2bstores.com. These stores are located in the United States, U.S. Virgin Islands, Puerto Rico, Canada and Japan. bebe also distributes and sells bebe branded product through both its licensees in approximately 19 countries.

Significant Gold Deposits Seen at Goldstar

North Springs’ Goldstar Property could contain as much as 2,769,230 tons of ore grading at 0.7 ounces per ton of gold, according to recent press releases, based on surface observations and preliminary drilling data. These figures suggest that the firm could be sitting on up to two million ounces of gold worth approximately $3.2 billion at today’s dollars.

But despite the investor optimism surrounding the stock, there have been no actual reserve currently identified at the Goldstar Property. In fact, all of the company’s properties’ valuations registered at just $59,900 on its balance sheet as of October 31, 2011. However, the firm’s ongoing exploration activities are aimed at proving up these reserves.

Additional Progress Reported at Other Properties

North Springs has also recently reported significant progress in its other mineral projects. Its Imperial Gold/Silver Property began its first phase of exploration after completing an initial sampling; the firm is reviewing a work program for its North Springs Property; and, is working to begin development of its Bio and Belo Properies and Edum Banso Gold Project.

About North Springs Resources Corporation

North Springs Resources Corp. is focused on the evaluation, acquisition, exploration, and development of mineral resource properties. The Company is led by a skilled and experienced management team and independent consulting geologists with many years of experience. North Springs is committed to creating value for its shareholders by advancing its current holdings and by acquiring new properties with significant potential.

For additional information, please visit www.northspringsresources.com.

Earlier this week, the gaming company reported earnings of 54 cents per share, versus a consensus of 51 cents per share, on revenues of $210.4 million, versus estimates of $203.3 million. Meanwhile, the firm forecast 2012 earnings at between $2.25 and $2.45 per share, versus an analyst consensus of just $2.38 per share.

About Bally Technology Inc.

With a history dating back to 1932, Las Vegas-based Bally Technologies designs, manufactures, operates, and distributes advanced gaming devices, systems and technology solutions worldwide. Bally’s product line includes reel-spinning slot machines, video slots, wide-area progressives, interactive and mobile applications, and Class II, lottery, and central-determination games and platforms. Bally also offers an array of casino management, slot accounting, bonusing, cashless and table management solutions. For more information, please contact Laura Olson-Reyes, Director of Corporate Communications, at 702-584-7742, or visit http://www.BallyTech.com. Connect with Bally on Facebook, Twitter, YouTube and LinkedIn.

The debt crisis also threatens to spur another global recession. Several European countries have already implemented so-called austerity measures aimed at reducing deficit levels. But ironically, these same measures may end up slowing growth and causing more problems, according to some economists. The result is a crisis that many expect to grow worse over the coming quarters.

Opportunities in Large Cap Dividend Stocks

The threat of another recession has many investors fleeing to safe-haven assets. Large cap dividend stocks have been some of the best performers since the beginning of the crisis and may remain strong players for the foreseeable future, if the European situation isn’t resolved. However, one argument is that many of these large cap stock are overvalued for the very reason that they’re in demand.

Some popular large cap dividend stocks include:

• BT Group plc (BT, Free Analysis)
• Seagate Technology plc (STX, Free Analysis)
• Philip Morris International Inc. (PM, Free Analysis)
• Paychex Inc. (PAYX, Free Analysis)
• Sanofi SA (SNY, Free Analysis)

Australia & Brazil Benefit from Commodities Boom

Despite the European debt crisis, some economies continue to expand. China’s economy is still growing in excess of 7% per year even as its own government tries to slow it down. Several emerging markets also continue to grow, albeit at a slower pace than before the eurozone problems arose.  But the real beneficiaries of this growth are commodity prices.

Commodities are in strong demand for emerging markets that are continuing to grow. And the longer-term the inflationary effects of stimulus spending should help further boost their value. For investors, this means that commodity-driven economies like Brazil and Australia may continue to be a smart bet until a real plan is developed and Europe and the world is on the road to recovery.

Here are a few smart stocks in this arena, according to many analysts:

• National Australia Bank Ltd. (NABZY, Free Analysis)
• Australia and New Zealand Banking (ANZBY, Free Analysis)
• Rio Tinto plc (RIO, Free Analysis)
• Vale (VALE, Free Analysis)
• BHP Billiton plc (BBL, Free Analysis)

Citing supply chain checks, the analyst believes the contract could add $101 million to its 2012 revenue and $110 million to its 2013 revenues. The move also follows bullish commentary by a number of other analysts, including Cantor, which maintains a $35.00 per share price target on the stock that represents an even loftier 38% premium to the current price.

A Potentially Undervalued Dividend Stock

Maxim’s shares may be trading up just 7.28% so far this year, but that has made its stock look somewhat attractive. Trading at 15x its trailing 12-month earnings with modest earnings growth, the company may not seem all that attractive to growth investors. But its stable performance and 3.47% dividend make it attractive for income investors.

The potential iPhone 5 contract with Apple would also represent a key growth driver moving forward. On a quarterly basis, the $101 million would add about $25 million in net revenues, which could boost its growth by more than 4% in and of itself. In theory, this could lead to an improved earnings multiple and a higher share price.

About Maxim Integrated Products

Maxim designs, develops, manufactures and markets a broad range of linear and mixed-signal integrated circuits, commonly referred to as analog circuits, for a large number of geographically diverse customers. The company also provides a range of high-frequency process technologies and capabilities that can be used in custom designs. The analog market is fragmented and characterized by many diverse applications, a great number of product variations and, with respect to many circuit types, relatively long product life cycles.

The company is a global company with wafer manufacturing facilities in the United States, testing facilities in the Philippines and Thailand and sales and circuit design offices throughout the world. The major end-markets in which the company’s products are sold are the communications, computing, consumer and industrial markets.

The Phase 2b clinical trial results showed a complete response in one patient and partial responses in 11 patients of 24 patient population. Six of the 12 major responders cleared more than 75% of their measurable disease, while the disease control rate totaled around 83%. Finally, the treatment was well-tolerated with fatigue being the most common side-effect.

Past Results have Burned Investors

Many microcap investors should recognize the name Genta. In the past, the company has proclaimed to have a blockbuster drug entering Phase II and III clinical trials only to have it fail and the stock drop sharply. Most recently, the firm’s agenda trial for melanoma reported disappointing results that dropped the stock’s value to virtually nil.

In its heyday, the company’s Genasense pushed its stock from $0.40 to more than $1.15 per share before failing in Phase III clinical trials. The clinical results from that trial showed that – after a decade of development and millions in expenses – the drug performed only marginally better than chemotherapy alone in a targeted subset of patients with advanced melanoma.

Tesetaxel: Same Story or New Opportunity?

Genta’s Tesetaxel is different than Genasense, but many investors are wondering if it’s another rendition of the same story. The drug is an orally-taken treatment in the same class of drugs as paclitaxel and docetaxel. While the latter drugs suffer from safety concerns, the company hopes that its Tesetaxel can avoid these problems and realize the same efficacy.

Excluding today’s movement, many investors appear to remain skeptical. Genta’s market capitalization stands at just $6.19 million, which is a fraction of where it should be trading with a Phase II/III orphan fast-tracked drug. However, if the results keep up, the stock could certainly prove to be a strong bargain at these levels.

The Key Takeaway…

• Genta recently reported strong results in a Phase IIb clinical trial, but past results suggest that investors should be cautious.

Child & Mexico Boost Top-line Results

Last quarter, Opko Health reported revenues that jumped 20% to $6.8 million thanks to new customer additions at its Chilean and Mexican pharmaceutical businesses. These results helped improve its gross margins, but higher expenses did lead to a slight jump in its net loss, which reached $8.8 million or $0.03 per share, according to its 10-Q filing with the SEC.

The company also made a number of savvy business moves during the quarter. After listing its stock on the NYSE in September, the company sold its ophthalmic instrumentation business to Optos plc for $17.5 million down and up to $22.5 million in future royalties. Then in October, the firm acquired Claros Diagnostics for $10 million in cash and $20 million in stock.

Claros Diagnostics has developed a novel microfluidics-based test system consisting of a disposable test cassette that resembles a credit card and a small but sophisticated desktop analyzer. The devices produce high-performance quantitative blood tests results within minutes and permit the transition of complex immunoassays and other tests from a set reference.

Analysts Remain Bullish on the Firm’s Future

Many analysts also remain very bullish on Opko Health moving forward. In mid-November, Jefferies initiated the company with a Buy rating and $8.00 per share price target. At a significant 64% premium to the current market price, the analyst’s price target reflects a very bullish outlook on the company and its future plans.

CNBC’s Jim Cramer has also been a fan of the stock. In early November, the hedge fund manager turned television star recommended the stock on his Lightning Round segment of Mad Money.

Key Points to Remember…

• Opko Heath Chairman and CEO Dr. Phillip Frost recently purchased 50,000 shares of stock on the open market, signaling confidence in the company’s future.
• Last quarter, the company reported higher results and a series of moves that could pay off over the coming quarters.
• Analysts remain bullish on the company, with Jefferies initiating it with a Buy rating and $8.00 per share price target.

Lazard is Bullish, but Others are Mixed

Lazard Capital raised its price target to $57.00 per share, a 10.4% premium to the current market price, and maintained its Buy rating on the stock, saying that it expects the firm to report another strong quarter. In aggregate, 22 analysts have an average price target of $49.86 per share, with a low of $32.00 per share and a high of $61.00 per share.

Despite these lofty projections, other analysts aren’t so bullish on the company. UBS analysts downgraded the stock in November based on its valuation and set a $54.00 per share price target on the name. The stock trades with a lofty price-earnings multiple of more than 70x, while staying hear its 52-week high of $53.42 per share.

Past Results Suggest Earnings Beat

Red Hat has a history of beating analyst estimates, with three earnings beats out of the last four quarters. For instance, in August, the company reported earnings of 29 cents per share, compared to 25 cents estimates, beating them by 16%. Analysts have also kept their estimates relatively steady, suggesting that they are keeping expectations tepid.

The company’s growth also continues to outpace other in its industry, although some projects show this slowing over the coming years. This year, analysts expect the firm to grow at a 30% clip, compared to 20% industry growth. But next year, that growth may drop to 10% compared to 24% industry growth, according to aggregate analyst estimates.

Key Takeaway Points…

• Red Hat has experienced significant growth over the past year, both in its share price and financial results, beating analyst estimates.
• Many analysts believe that this growth will continue, but others believe that the stock may be overvalued relative to its peers.