I went back to the well yesterday on BCRX because I saw a sudden upsurge around 3pm. I had no basis for buying it other than “something must be up” and my predisposition for liking the stock (it was the 11/16 Trade of the Day). Since it was below 12 again I jumped in but, cautious guy that I am, I only bought a little.
Too bad for me! The damn thing jumped up 16% in pre market with a new Roche partnership being “officially” announced at 1:30 am. This is why I always keep a few biotechs on my watch screen, you never know when one is going to pop. They can also burn the hell out of you.
In this case we have a good company in a good sector that hasn’t made more than 2M in their best year announcing a deal that will net them $25M “up front,” $5M over 2 years and “Future event payments could reach $530 million in addition to royalties on product sales of BCX-4208.” WOW!
Now I like this company for other reasons (as discussed on the 16th) but this is beyond major. The market cap of this company is just (as of yesterday) $312M and only 29% of the company is held by institutions.
If we assume that they make just $10M per year on the average and have no other successes, we still get a p/e all the way down to 30 in an industry where other companies fetch 100.
So this stock can easily go to $20, today! I will buy some more, if I can, at $15 but only after waiting for a pullback that looks like it’s reversing. A lot of day traders and rule traders will be dumping on a 20% up move and that may present a buying opportunity but I really don’t recommend this trade as it is very dangerous.
On the whole, I am just so glad I bought this at $11.75!
