Here’s Why Topeca Capital Markets Lowered Price Targets on Bonanza Creek Energy Inc (NYSE:BCEI)

Equity Analyst Gabriele Sorbara of Topeca Capital Markets Issued a report on Bonanza Creek Energy Inc (NYSE:BCEI) titled ”3Q15 Preview; Adjusting Estimates; Reaffirm Buy.” Lowering their price target to $11 from $18.

According to the report ”We revisit our estimates for our recently revised commodity price deck (see this morning’s weekly industry report for details) and preview 3Q15 results, expected in early November. We reaffirm our Buy, but recognize it is difficult to recommend shares given leverage metrics blow-out over the next 12-18 months at the current strip prices. However, we continue to believe shares remain attractive in a normalized environment (>$65/bbl NYMEX WTI oil).

With 3Q15 results, investors will focus on management’s body language towards a 2016 spending program and a potential transaction with Rocky Mountain Infrastructure, LLC (RMI), which would reduce the 2016 capex burden. Based on our revised commodity price assumptions, we reaffirm our Buy, but lower our PT to $11 (from $18 previously).

Bonanza Creek Energy Inc (NYSE:BCEI) is an independent oil and natural gas company engaged in the acquisition, exploration, development and production of onshore oil and associated liquids-rich natural gas in the United States. The Company’s assets and operations are concentrated primarily in the Rocky Mountains in the Wattenberg Field, focused on the Niobrara and Codell formations, and in southern Arkansas, focused on the oily Cotton Valley sands.

On July 27 BCEI announced second Quarter 2015 Financial and Operating Results; Sales volumes grew to 28.0 Mboe/d representing a 14% increase compared to estimated 3-stream sales volumes in the second quarter of 2014(1) and 2% compared to first quarter 2015. The Company also announced they Increased Rocky Mountain region sales volumes by 21% compared to second quarter 2014(1), to 22.7 Mboe/d and 4% compared to first quarter 2015.”

Equity Analyst Gabriele Sorbara raised some key points including ”3Q15 production and pricing should be in line with guidance. We model 3Q15 production at 28,634 boe/d, roughly in line with the Consensus of 28,599 boe/d, and compared to management’s guidance of 28,600 boe/d. On the pricing front, 3Q15 Wattenberg oil differentials are expected within its guidance range of $9.00-$10.00/bbl. All in all, we model 3Q15 loss and DCFPS at ($0.29) and $1.01, vs. the Consensus of ($0.20) and $1.14, respectively. We believe the Consensus has yet to reset for the lower actual NYMEX oil prices during the quarter.

Potential RMI transaction would lighten capital expenditures. Over its entire Wattenberg position, management estimates $300-$400 million for infrastructure spending over the next several years; however, BCEI now believes it has the scale to attract a partner to build it out. RMI has a book value of $50 million and is growing into year-end. Currently, BCEI has two remaining bidders in the negotiation process. BCEI’s goal is to lighten the capital load on the infrastructure side with a transaction announcement as soon as with 3Q15 results. Stay tuned as this is a key catalyst that could lift shares out of this depressed trading range.

On valuation Analyst Gabriele Sorbara noted that ”On an EV/EBITDA basis, BCEI is trading at 4.3x and 4.2x for 2016 and 2017, vs. its peers’ average multiples of 5.8x and 4.8x, respectively. Our $11 PT implies 2016 and 2017 EV/EBITDA metrics of 5.3x and 5.2x, respectively. BCEI trades at a 69.5% discount to our $19 RNAV.

Why Stephens, Inc., Upgraded Price Target on Pacific Biosciences of California (NASDAQ:PACB) from $7 to $8

Equity Analysts Drew Jones and associate Garrett Phelps of Stephens, Inc., issued a report on Pacific Biosciences of California (NASDAQ:PACB) titled ”Upgrading to OW/Vol: Improved Technology, Costs Decrease, Roche Relationship” and upgraded their price target from $7 to $8.

According to the analysts ”We are upgrading PACB to Overweight/Vol. from Equal-Weight (Vol) given an increasingly favorable outlook for 2016 and beyond. We expect substantial costs reductions for the customer using the new Sequel system—sequencing costs per genome have decreased by a factor of four upon launch. In addition the Roche (RHHBY, NR – $33.22) partnership timeline has moved forward (all milestone pmts. expected this year). Better technology, lower costs, and a strengthening of the Roche relationship make us believe now is the right time to step into PACB. We are increasing our price target to $8 from $7, ~6x our 2016 revenue estimate ex-milestone payments (in line with historical multiple).”

Pacific Biosciences of California (NASDAQ:PACB) offers sequencing systems to help scientists resolve genetically complex problems. Based on its novel Single Molecule, Real-Time (SMRT®) Technology, Pacific Biosciences’ products enable: de novo genome assembly to finish genomes in order to more fully identify, annotate and decipher genomic structures; full-length transcript analysis to improve annotations in reference genomes, characterize alternatively spliced isoforms in important gene families, and find novel genes; targeted sequencing to more comprehensively characterize genetic variations; and DNA base modification identification to help characterize epigenetic regulation and DNA damage.

Pacific Biosciences’ technology provides the industry’s highest consensus accuracy over the longest read lengths in combination with the ability to detect real-time kinetic information. The Sequel System, including consumables and software, provides a simple, fast, end-to-end workflow for SMRT Sequencing.

On October 1 PACB announced that its technology will be featured in 36 presentations at next week’s American Society of Human Genetics (ASHG) 2015 annual meeting taking place in Baltimore, Maryland.

The company will also display its new instrument, the Sequel™ System, which was launched yesterday. The Sequel System provides higher throughput, more scalability, a reduced footprint and lower sequencing project costs compared to the PacBio® RS II System, while maintaining the existing benefits of the company’s SMRT Technology.

Chief Scientific Officer of Pacific Biosciences, Jonas Korlach said “We are excited to support the human genetics community as they pursue the generation of higher-quality whole human genomes, and move beyond SNPs to sequence the full size-spectrum of human genetic variation. With the introduction of our Sequel platform, SMRT Sequencing will be available to more scientists seeking to find the underlying heritability of genetic diseases.”

Key points raised by Equity Analysts Drew Jones and associate Garrett Phelps concluded with ”We are raising our 2015 revenue to $97.3 mil. from our previous estimate of $83.4 mil. Note that this accounts for an incremental $10 mil. in milestone payments from Roche which were previously expected to occur in 1H16.

Estimates for 2015 EPS of ($0.84) vs. ($0.81) estimate previously are $83.1 mil. in revenue and ($0.91) in EPS, vs. prior estimates of $88.7 mil. and ($0.77) respectively. Note that revised revenue estimate is net of a $10 mil. decrease due to a milestone payment from Roche being pulled forward into 4Q15.

PACB has announced the launch of its new Sequel system based upon the Company’s SMRT sequencing technology as a research use only product. Importantly, the Sequel system will be offered for approximately half the cost of the Company’s RSII sequencer ($350K for Sequel vs. $700K for RSII). In addition, this new sequencer will occupy one-third of the space of the legacy system at one-third of its weight. Mgmt. noted that historically the upfront cost of PACB’s product offering has been a barrier to adoption of the technology. As such the expectation is that the system will now be within the price range of significantly more customers, especially in the academic market, where PACB already has a good deal of support.

MorningStar Updates Star Rating on Continental Resources, Inc.(NYSE:CLR) Here Is Why

Equity Analyst David Meats of Investment Research Firm MorningStar issued a research report called ”Continental has a dominant position in the Williston Basin and is delineating SCOOP in Oklahoma.and Updated their Star Rating on Continental Resources, Inc.(NYSE:CLR).

According to the report ”Continental Resources went public in 2007, but the company was established several decades prior by the current CEO and chairman, Harold Hamm. Originally targeting natural gas plays in Oklahoma, the focus shifted to oil in 2007 and the company became active in the Northern Rockies’ Williston Basin (North Dakota and Montana). Continental played a key role in the early development of the Bakken Shale there and now holds 1.2 million net acres prospective in this prolific oil play.

Continental Resources, Inc.(NYSE:CLR) is a top independent oil producer in the lower 48 United States and a leader in America’s energy renaissance. Based in Oklahoma City, Continental is the largest leaseholder and one of the largest producers in the nation’s premier oil field, the Bakken play of North Dakota and Montana.

The Company also has significant positions in Oklahoma, including its SCOOP Woodford and SCOOP Springer discoveries and the STACK and Northwest Cana plays. With a focus on the exploration and production of oil, Continental has unlocked the technology and resources vital to American energy independence and is a strong free market advocate in favor of lifting the domestic crude oil export ban. In 2015, the Company will celebrate 48 years of operations.

On September 8 the Company announced plans to spend approximately $300 to $350 million less than its previously approved capital budget for 2015 to better align spending with cash flow at current commodity prices. The Company plans to defer well completion activity, except for where it has contractual considerations or it accomplishes specific strategic objectives. Continental is also reducing its operated rig count in the Bakken from 10 to eight rigs by the end of the month.

Equity Analyst David Meats continues ”More recently, the company has added a second string to its bow with the ongoing delineation of the SCOOP (South Central Oklahoma Oil Play). This acronym actually refers to the southern leg of the Anadarko Basin’s Woodford Shale in Oklahoma. The Woodford is geologically comparable to the better-known Eagle Ford and Bakken and is a decent reservoir in its own right. But it was also the source rock for the overlying Springer formation, which has more favorable reservoir properties, supporting stronger well economics.

Oil prices slumped sharply at the end of 2014 and have yet to recover, but even after accounting for this, the returns on Continental’s Springer wells look rather impressive. Like peers, Continental faces an uphill struggle coping with lower oil prices. Unfortunately, the challenge is exacerbated by the lack of downside protection.

Anticipating a faster rebound, management elected to monetize its hedges after the third quarter of 2014. The strategy provided a one-time revenue boost but left the company fully exposed to prices that are now expected to remain in the $50-$60/bbl range through 2015. Nonetheless, we believe the company has more than enough liquidity in place to ride out the current slump and return to profitability as prices recover.

Bulls Say: Continental is one of the few E&Ps with the ability to balance spending with cash flows in the current commodity price environment. 3 As a first mover in the SCOOP play, Continental has established a key competitive advantage and will continue to drive forward the delineation of this impressive new play. 3 Continental’s asset portfolio contains depth as well as quality, and will take several decades to fully develop.

A Look at Why RBC Capital Markets Lowered their Price Target on Flextronics International Ltd.(NASDAQ:FLEX) to $13 from $14.

On October 4 Equity Analysts Amit Daryanani, CFA, Mitch Steves and Associates Irvin Liu and Jeriel Ong of RBC Capital Markets Equity Research Lowered their Price Target on Flextronics International Ltd.(NASDAQ:FLEX) to $13 from $14. and Issued a report titled ”Adjusting Estimates To Reflect Challenging Macro In H2:15.”

According to the report ”We are adjusting our estimates lower on FLEX to reflect multiple headwinds that we think will curtail revenue expectations in H2:15, though we think margins, EPS and FCF impact should be minimal. In addition, we see several “self-help” levers starting to build that should enable double digit EPS growth in CY16 – (A) Mirror Controls contribution, (B) NexTracker benefit, (C) Margin expansion within IEI & (D) HRS organic growth given bookings ramp. Near-term, we see headwind stemming from – (1) Lenovo challenges given disappointing data in China & Brazil, (2) muted growth environment in printer, (3) lack of demand recovery within INS segment and (4) generally aggressive Street estimates at 8% q/ q growth for the Dec-qtr. While we see a reasonable revenue headwind ($100-150M/quarter), we suspect the EPS impact will be more muted. Maintain OP and reduce our PT to $13 (prior $14).

Flextronics International Ltd.(NASDAQ:FLEX) is a leading sketch-to-scale™ solutions company that designs and builds intelligent products for a connected world. With approximately 200,000 professionals across 30 countries and a promise to help the world Live smarter™, the company provides innovative design, engineering, manufacturing, real-time supply chain insight and logistics services to companies of all sizes in various industries and end-markets.

On October 2 FLEX announced the grand opening of its new medical device manufacturing facility and Center of Excellence in Tijuana, Mexico, dedicated to the innovative development and manufacturing of medical devices.

Located ten minutes from San Diego, California, the new Flex medical facility will serve as the showcase location for Flex medical operations, employing 2,400 workers and spanning over 530,000 square feet. Devices produced at this facility for Flex’s OEM customers will help to diagnose and treat a wide variety of medical conditions, ranging from cardiovascular diseases and diabetes, to hearing impairment, neurological diseases and skin ailments.

The report continues ”We believe the company is positioned to surprise on the upside with regard to operating margins as they stabilize above 3%+ over the next 4–6 quarters, causing EPS to see meaningful expansion. With the current macroeconomic backdrop and an improvement in margins on the horizon, we believe the stock should see multiples expand.

The Upside scenario: In this scenario, we assume the macroeconomic environment improves in a meaningful way and the company sees revenue leverage from historically low-margin product lines such as the CTG segment. In addition, a stronger uptake in telecom capex spending would favorably impact the company’s Integrated Network Solutions segment. In this scenario, robust demand for tablets continues and gaming consoles see an uptake in demand. Our upside scenario value is $16.

Equity Analysts Amit Daryanani, CFA, Mitch Steves and Associates Irvin Liu and Jeriel Ong concluded that ”We are Outperform rated and have a $13 price target on FLEX. Looking at valuations across a cycle, we believe EMS companies trade at a median of 10x NTM PE excluding valuation leader PLXS. Our price target applies an ~12x NTM P/E multiple, as the company is seeing material revenue ramps and we believe that it could achieve 3%+ margins by FY16E.

Price target impediments involve the level of end-market demand, pricing, the pace of new product introductions, and the ability to generate free cash flow, lower production costs, and identify and integrate attractive acquisition candidates.

The Inside Scoop on Why Deutsche Bank Reiterated their $36 Buy Rating on TerraForm Power Inc(NASDAQ:TERP)

On October 4 research analyst Vishal Shah and research associate Jerimiah Booream-Phelps Reiterated their $36 Buy Rating on TerraForm Power Inc(NASDAQ:TERP) and issued a report titled ”Takeaways from Management Meeting.”

Overall thoughts on the meeting were ”We walked away incrementally more positive after meeting TERP management team. We expect concerns over near term capital raise to fade over the next few months as the company executes on closing the VSLR and Invenergy transactions. We also believe the company is evaluating a number of other options such as providing additional disclosure on existing projects or call right list and is working closely with private market participants in order to monetize existing projects. Reiterate Buy, $36 price target.

TerraForm Power Inc(NASDAQ:TERP) is a renewable energy leader that is changing how energy is generated, distributed and owned. TerraForm Power creates value for its investors by owning and operating clean energy power plants.

TerraForm Power creates value for its investors by owning and operating high quality solar power portfolios around the globe. We believe we have a responsibility to transform the future by producing energy that is sustainable and environmentally friendly. With demand for energy growing, together with increasingly scarce natural resources, developing home grown renewable resources like solar is vital.

TerraForm Power portfolio consist on a diverse range of high quality renewable energy assets around the world that generates clean and sustainable energy while delivering the returns our investors expect.

Key takeaways from the meeting included; 1) Project finance market remains open and could potentially be an option to finance the Vivint assets in a scenario where the high yield market remains challenging. Mgmt suggested that 70% of the cash flow was from unlevered assets and there is sufficient balance sheet capacity to take additional project debt; 2) Mgmt also suggested that they have a lot of flexibility with the Oakfield project drop down from SUNE and could use the cash generated from project as well as revolver in order to fund the drop down.

The company’s undrawn revolving facility currently stands at $725m and would still remain above $550m post the potential draw down for Oakfield project; 3) Private market valuations for projects have not moved as much as public market valuations and mgmt is looking at a number of options including strategic project sales in order to create shareholder value; 4) The company suggested that SUNE margin loan has no impact on TERP’s ability to raise additional capital and does not trigger any collateral obligation; 5) Unit economics of underlying projects remain relatively attractive and the company reiterated the view that 2015/16 dividend targets are easily achievable. Moreover, the company reiterated the view that outlook beyond 2016 can easily be supported by the 3.7GW ROFO list.

Vishal Shah and his associate Jerimiah Booream-Phelps concluded that “‘As we highlighted in our Friday note, shares are currently not discounting growth beyond 2016 and downside case valuation is $16 after making very conservative assumptions. We believe additional disclosure could help more accurately model project cash flows over the next few years and remove some conservatism from our $16 valuation model. We also believe more disclosure on unit economics of projects in the ROFO list would enable investors to get more comfortable about growth outlook beyond 2016.”

Jefferies Reiterates $3.50 price target on AcelRx Pharmaceuticals Inc(NASDAQ:ACRX)

Equity Research Firm Jefferies Reiterated its $3.50 price target on AcelRx Pharmaceuticals Inc(NASDAQ:ACRX) and Issued a Research Report titled ”ACRX: HOLD: Key Takeaways from R&D Day” on October 2.

Equity Analysts Biren Amin, Hugo Ong, Ph.D., and Shaunak Deepak stated ”At its R&D Day, ACRX reviewed its pipeline portfolio which included a focus on ARX-04 which could be the next meaningful revenue opportunity. Based on clinical data and market research, ACRX estimates 10-12M patients annually could be eligible for ARX-04. ARX-04 is currently in an ongoing PIII SAP302 in the ER and could report data in Q1’16. On Zalviso, we await FDA minutes next week which could shed light on its regulatory path.”

AcelRx Pharmaceuticals Inc(NASDAQ:ACRX) is a specialty pharmaceutical company focused on the development and commercialization of innovative therapies for the treatment of acute pain. In the US, the Company’s late-stage pipeline includes ARX-04 (sufentanil sublingual tablet, 30 mcg) for the treatment of moderate-to-severe acute pain in a medically supervised setting; and Zalviso™ (sufentanil sublingual tablet system) for the management of moderate-to-severe acute pain in adult patients in the hospital setting. ARX-04 delivers 30 mcg sufentanil sublingual, a high therapeutic index opioid, through a disposable, pre-filled, single-dose applicator (SDA).

AcelRx has reported positive results from the pivotal Phase 3 SAP301 ambulatory surgery study, and will be advancing ARX-04 into a study in emergency room patients in 2015. Zalviso delivers 15 mcg sufentanil sublingual tablets through a non-invasive delivery route via a pre-programmed, patient-controlled analgesia device. In response to the New Drug Application (NDA) AcelRx submitted to the U.S. Food and Drug Administration (FDA) seeking approval for Zalviso, the Company received a Complete Response Letter (CRL) on July 25, 2014. The FDA has requested an additional clinical study prior to the resubmission of the Zalviso NDA.  Zalviso is authorized for marketing in the European Union as well as in the European Economic Union.

Biren Amin , Hugo Ong, Ph.D., and Shaunak Deepak continue ”The company recently initiated the PIII trial in the emergency room (ER) setting which should read out in Q1 2016 and could lead to an NDA submission for ARX-04 in 1H 2016 and potential approval in mid-2017. Moreover, ACRX reviewed clinical data from the SAP-301, a pivotal PIII study investigating ARX-04 v. placebo in moderate-to-severe acute pain following ambulatory abdominal surgery. ARX-04 hit the primary endpoint with a difference in SPID-12 scores of +25.8 for ARX-04 pts v. +13.1 for placebo (p<0.001). No patient on ARX-04 dropped out prior to 24 hrs due to an AE, and a lower percent of ARX-04 patients dropped out due to lack of efficacy v. placebo (3.7% v. 18.5%, respectively; p=0.002). Also, a lower percentage of pts.

They go on to say that ”ACRX reviewed the potential market opportunity for ARX-04, which include the Emergency Room (ER), the in-patient surgical setting for less invasive surgeries not requiring PCA device, the out-patient or ambulatory settings, and non-surgical acute pain setting. ACRX anticipates that ARX-04 could be used as an alternative to IV opioids and/or as a bridge from IV to oral opioids in these settings. ACRX’ arrangement with the Department of Defense (DoD) was a purchase of up to 200k commercial units at $20/unit. If approved, ACRX anticipates pricing at a potential premium to this price for commercial use and possibly upwards to $75/unit which represents the current cost of IV morphine. Collectively, ACRX anticipates ARX-04 could be a $1.3B market opportunity at peak.

Concluding that ”ACRX reiterated that it had its meeting with the FDA in early September on Zalviso, and that it continues to await the minutes from that meeting which could come next week. At that point, we may gain clarity on the regulatory path for Zalviso and whether ACRX needs to run another clinical trial and what the design/nature of the trial might be. If a trial is needed, ACRX will finalize plans for the study in Q1’16. ACRX recently sold part of its EU royalties/milestones for Zalviso for $65M, which gives them a cash position of $100M+ which should give them sufficient runway until at least mid-’17.

BTIG Equity Research Reiterates $12 Price Target on Progenics Pharmaceuticals, Inc.(NASDAQ:PGNX)

Equity Analyst Hartaj Singh of BTIG Equity Research reiterated his $12 price target on Progenics Pharmaceuticals, Inc.(NASDAQ:PGNX) October 3 in a research report titled ”Pipeline Focus Increasing.”

According to Hartaj Singh ”PGNX is more than a play on Relistor royalties, with three mid/late stage assets that are positioning the company closer to creating a valuation rerating. Company management continues to demonstrate that they are building franchises that meet important unmet needs in rare diseases and in the diagnosis and treatment of prostate cancer. We continue to be bullish.

Progenics Pharmaceuticals, Inc.(NASDAQ:PGNX) is developing innovative medicines for oncology, with a pipeline that includes several product candidates in later-stage clinical development. Progenics’ first-in-class PSMA-targeted technology platform for prostate cancer includes a small molecule imaging agent that has completed a phase 2 trial and an antibody drug conjugate therapeutic which has also completed a two-cohort phase 2 clinical trial.

Among other assets in its pipeline of targeted radiotherapy and molecular imaging compounds is AZEDRA™, an ultra-orphan radiotherapy candidate currently in a phase 2 study under an SPA. Progenics’ first commercial product, RELISTOR® (methylnaltrexone bromide) for opioid-induced constipation, is partnered with and marketed by Valeant Pharmaceuticals International, Inc.

Hartaj Singh continues ”For Azedra, Progenics’ rare disease asset targeting a rare tumor where few therapeutics options currently exist, the company indicated that an additional 15 patients had been recruited to the pivotal (registration enabling) phase 2 trial that is currently being conducted by the company. The company continues to expect enrollment to be complete by EY15 and data readout in late 2016/early 2017.

The imaging agent 1404 continues its development path, with a phase 3 initiating soon. A phase 2 is currently underway in Japan (initiated 04/15) with partner Fujifilm, and an investigator-sponsored trial at Weill Cornell will enroll mCRPC men. The range and scope of clinical activities around 1404 underscores its attractive profile.

The physician expert presenting 1404 indicated that ~20% of men having biopsies (~1.3m/year US) could be good candidates for it. Progenics indicated it will provide an update on PSMA ADC later in the year, but did review existing data and the phase 1 study design for its next PSMA-targeting ‘shot on goal’ drug, 1095. Animal data and a German compassionate use trial indicate a very intriguing profile. Valuation: Our price target of $12 is based on a blended DCF and 2016e P/E multiple approach.

Earlier this month PGNX the U.S. Food and Drug Administration (FDA) has accepted for review Valeant’s New Drug Application for RELISTOR® (methylnaltrexone bromide) Tablets for the treatment of opioid-induced constipation (OIC) in adult patients with chronic non-cancer pain. The FDA has assigned a Prescription Drug User Fee Act (PDUFA) action date of April 16, 2016.

RELISTOR is a peripherally acting mu-opioid receptor antagonist specifically designed to block the constipating effects of opioid pain medications in the gastrointestinal tract. RELISTOR does not cross the blood-brain barrier, therefore relieving the distressing effects of the constipation without affecting the analgesic effect of the opioid. RELISTOR Subcutaneous Injection has been FDA approved since 2008 to treat OIC in patients with advanced illness who are receiving palliative care, and was approved in 2014 for the treatment of OIC in patients with chronic non-cancer pain.

In the clinical study in adult patients with opioid-induced constipation and chronic non-cancer pain, the most common adverse reactions (≥ 1%) were abdominal pain, nausea, diarrhea, and hyperhidrosis, hot flush, tremor, and chills. In clinical studies in adult patients with opioid-induced constipation and advanced illness, the most common adverse reactions (≥ 5%) were abdominal pain, flatulence, nausea, dizziness, and diarrhea.


MorningStar Cuts Fair Value Estimate to $23 from $25 on Micron Technology, Inc.(NASDAQ:MU)

Equity Analyst Abhinav Davuluri of Investment Research Firm MorningStar issued a research report called ”2015 Headwins Expected to Persist in 2016 for Micron Technology, Inc.(NASDAQ:MU); Cutting Fair Value Estimate to $23

According to the report ”Micron reported fiscal fourth-quarter results that were in line with our expectations. PC-related DRAM once again served as a drag on gross margin; however, management stressed that non-PC market DRAM (mobile, server, etc.) demand was relatively healthy. While DRAM still dominates as a percentage of shares, we believe the firm is headed in the right direction toward a more favorable product mix that will ultimately feature more 3D NAND.

Micron Technology, Inc.(NASDAQ:MU) is a global leader in advanced semiconductor systems. Micron’s broad portfolio of high-performance memory technologies-including DRAM, NAND and NOR Flash-is the basis for solid state drives, modules, multichip packages and other system solutions. Backed by more than 35 years of technology leadership, Micron’s memory solutions enable the world’s most innovative computing, consumer, enterprise storage, networking, mobile, embedded and automotive applications. Micron’s common stock is traded on the NASDAQ under the MU symbol.

Equity Analyst Abhinav Davuluri continued ”Shares rose almost 8% in after-hours trading, as Micron expects industry supply and demand to stabilize in 2016 after a rough 2015 due to DRAM oversupply. Conversely, we don’t think this stabilization will be substantial until the back half of 2016, and coupled with weak guidance for next quarter, we are cutting our fair value estimate to $23 from $25 per share. While shares still trade at a discount to our updated fair value and could be appealing to some long-term investors, we reiterate our very high uncertainty rating for this no-moat company.

Fourth-quarter revenue was $3.6 billion, sequentially down for the third straight quarter. Although the compute/ networking business unit was expectedly down (14% from last quarter), the mobile business unit was up about 2%.

The latter has benefited from increasing memory content in memory, whereas the former suffering from a 7% decline in DRAM average selling price. We were disappointed in the continued tumble of Micron’s gross margin, down 400 basis points sequentially to 27%.

Fiscal 2015 revenue was roughly flat from the previous year, and we expect similar DRAM-related headwinds to persist through 2016. Granted, the volatility of the memory industry will remain a major risk, but we think Micron is wellpositioned in the long term through its 3D NAND and 3D XPoint pipelines.

On October 1 MU announced results of operations for its fourth quarter and 2015 fiscal year, which ended September 3, 2015. Revenues for the fourth quarter of fiscal 2015 were $3.60 billion and were 7 percent lower compared to the third quarter of fiscal 2015 and 15 percent lower compared to the fourth quarter of fiscal 2014. Revenues for fiscal year 2015 were $16.19 billion and net income attributable to Micron shareholders was $2.90 billion, or $2.47 per diluted share. Cash flows from operations were $5.21 billion for fiscal year 2015.

“We are pleased to report Fiscal Year 2015 results that include revenue of $16.2 billion, $2.72 in non-GAAP earnings per share, and $2.3 billion in dilution management activities, including convert retirements and share repurchases,” stated D. Mark Durcan, Chief Executive Officer. “While fourth quarter results were impacted by continued weakness in the PC sector, we believe that memory industry fundamentals remain favorable over the long term.”


Here is Why MorningStar Updated Forecasts and Estimates on Exelixis, Inc.(NASDAQ:EXEL)

Equity Analysts Karen Andersen, CFA and Stefan Quenneville, CFA of Investment Research Firm MorningStar issued a research report called ”Pricing Concerns in Pharma and Biotech Industries Creates Some Buying Opportunities and updated star rating on Exelixis, Inc.(NASDAQ:EXEL)

According to the report ”Exelixis is best known for its R&D prowess for discovering targeted cancer drugs, which has resulted in a pipeline of oncology products partnered with multiple Big Pharma players. The firm has evolved from being a discovery platform to focusing primarily on its lead product, Cometriq, which has shown robust activity in various tumor types and gained approval in the limited medullary thyroid cancer market in 2012. However, Cometriq’s failure in its Phase III program in the much larger metastatic castrate-resistant prostate cancer indication increases the uncertainty in the potential for the drug to become a significant oncology franchise. Nevertheless, the company recently reported positive Phase III results in metastatic renal cell carcinoma and has another trial ongoing in advanced hepatocellular carcinoma, which, if successful, could allow the drug to achieve peak annual sales around $1 billion.

Exelixis, Inc.(NASDAQ:EXEL) is a biopharmaceutical company committed to developing small molecule therapies for the treatment of cancer. Exelixis is focusing its development and commercialization efforts primarily on cabozantinib, its wholly-owned inhibitor of multiple receptor tyrosine kinases. Another Exelixis-discovered compound, cobimetinib, a selective inhibitor of MEK, received its first regulatory approval in Switzerland and is being evaluated by Roche and Genentech (a member of the Roche Group) in a broad development program under a collaboration with Exelixis.

Equity Analysts Karen Andersen, CFA and Stefan Quenneville, CFA continued ”Exelixis 1Q Results as Expected; Key Phase III Results Expected Mid-Year 01 May 2015 Following in-line first-quarter results, we are maintaining Exelixis’ fair value estimate of $2.70 per share and our nomoat, stable trend rating. After the failure of the Cometriq.

Phase III trial in prostate cancer, the company’s future rests primarily on the results of the drug’s ongoing Phase III study in metastatic renal cell carcinoma, which should report results around mid-year. Given the binary nature of the clinical trial and the company’s dwindling cash reserves, Exelixis faces an increasingly uncertain future.

On September 25 EXEL announced positive results from METEOR, the phase 3 pivotal trial comparing cabozantinib to everolimus in 658 patients with renal cell carcinoma (RCC) who have experienced disease progression following treatment with a VEGF receptor tyrosine kinase inhibitor (TKI). In July 2015, Exelixis disclosed that the trial met its primary endpoint, demonstrating a statistically significant increase in progression-free survival for patients in the cabozantinib arm. Principal investigator Toni K. Choueiri, M.D. will present detailed data from the late-breaking METEOR abstract (#4-LBA) on Saturday, September 26, during the Presidential Session I at the European Cancer Congress (ECC) 2015, which is being held September 25-29 in Vienna. The METEOR data and an accompanying editorial were also published today in The New England Journal of Medicine.

As announced in July, the METEOR trial met its primary endpoint of demonstrating a statistically significant increase in progression-free survival (PFS) for cabozantinib as compared to everolimus, as determined by an independent radiology committee. Per the trial protocol, the primary analysis was conducted among the first 375 patients randomized to ensure sufficient follow up and a PFS profile that would not be primarily weighted toward early events.

The median PFS was 7.4 months for the cabozantinib arm versus 3.8 months for the everolimus arm, corresponding to a 42% reduction in the rate of disease progression or death for cabozantinib as compared to the everolimus arm (hazard ratio [HR]=0.58, 95% confidence interval [CI] 0.45-0.75, p<0.001). Cabozantinib effects were favorable across patient stratification subgroups including the number of prior VEGF receptor TKI therapies and commonly applied RCC risk criteria developed by Motzer et al.


MorningStar Updates Forecasts and Estimates on Gilead Sciences, Inc.(NASDAQ:GILD) Here is Why

Equity Analysts Karen Andersen, CFA and Damien Conover, CFA of Investment Research Firm MorningStar issued a research report and updated Forecasts and Estimates on Gilead Sciences, Inc.(NASDAQ:GILD) On October 2.

According to the report ”Gilead’s focus on infectious disease has paid off in spades. With a small salesforce, inexpensive manufacturing, and selective research and development, it generates stellar profit margins, and the firm’s pipeline is extending its reach into other high-margin markets like hepatitis C and hematological oncology. With the approval of hepatitis C drug Sovaldi in late 2013, we think Gilead’s competitive advantages have strengthened, moving it into wide-moat territory.

Gilead Sciences, Inc.(NASDAQ:GILD) is a biopharmaceutical company that discovers, develops and commercializes innovative therapeutics in areas of unmet medical need. The company’s mission is to advance the care of patients suffering from life-threatening diseases. Gilead has operations in more than 30 countries worldwide, with headquarters in Foster City, California.

the report continues ”Gilead’s tenofovir molecule–in Viread, Truvada, and all single-tablet regimens–forms the heart of the firm’s $10 billion HIV franchise. Its newest single-tablet regimens, Complera and Stribild, are seeing rapid uptake and strong reimbursement. Such regimens offer patients convenience and affordability, as they are less likely to miss doses and develop drug resistance, and they only need to make one copayment. Gilead will see new competitive threats in HIV; Glaxo could introduce a Truvada/Tivicay single-tablet regimen once Truvada patents begin to expire in 2018, and generic versions of Atripla should be available beyond 2021.

However, we think Complera and Stribild will have a strong grasp on the market by this time, resetting the firm’s HIV patent cliff into the 2020s. Gilead’s pipeline drug TAF appears to have bone and renal safety advantages over tenofovir, and the first TAF combination regimen is poised to reach the market by the end of 2015.

On September 21 GILD announced topline results from four international Phase 3 clinical studies (ASTRAL-1, ASTRAL-2, ASTRAL-3 and ASTRAL-4) evaluating a once-daily, fixed-dose combination of the nucleotide analog polymerase inhibitor sofosbuvir (SOF) with velpatasvir (VEL), an investigational pangenotypic NS5Ainhibitor, for the treatment of genotype 1-6 chronic hepatitis C virus (HCV) infection.

In the ASTRAL-1, ASTRAL-2, and ASTRAL-3 studies, 1,035 patients with genotype 1-6 HCV infection received 12 weeks of SOF/VEL. Among these patients, 21 percent had compensated cirrhosis and 28 percent had failed prior treatments. The ASTRAL-4 study randomized 267 patients with decompensated cirrhosis (Child-Pugh class B) to receive 12 weeks of SOF/VEL with or without ribavirin (RBV), or 24 weeks of SOF/VEL. The primary endpoint for all studies was SVR12.

The intent-to-treat SVR12 rates observed in the ASTRAL studies are summarized in the table below. Complete results from all four studies will be presented at future scientific conferences.

Equity Analysts Karen Andersen, CFA and Damien Conover, CFA finished with ”Despite a flattening U.S. HCV market, we see growth prospects beyond 2015 in Europe and Japan. The big five European markets and Japan together have similar numbers of diagnosed hepatitis C patients as the U.S., with Japan standing out as the largest single market opportunity outside the U.S. We expect European growth to accelerate in 2015 as reimbursement discussions proceed, but competition also looks strong in this market, given the higher proportion of patients with Genotype 1b (where efficacy is generally strong across treatment options). However, the higher prevalence of Genotype 2 in Japan gives Gilead an edge in this market.