|Written by GSCR Staff|
|Wednesday, 02 October 2013 08:09|
Get Through ObamaCare Pain
Yesterday, in case you were unaware, was big day for politics with the government shut-down and the kick-off of Obamacare. As expected, there were ‘glitches’ in the system as wait times and hold times approached unbearable levels. Get used to it.
On Monday we stated that technology and healthcare were places to put some cash, particularly in stocks that have not run yet in 2013. Right on cue, the S&P Select Biotechnology Index (^SPISBI) was up over 2% and the iShares U.S. Technology ETF (IYW) was up 1.5%. Additionally, our new Market Monitor pick, TTM Technologies (NASDAQ – TTMI - $9.74), was up 1.75%.
Today we will shift gears to healthcare. Most analysts concur that Obamacare will actually help health insurance companies and several sectors of the healthcare industry. As it stands the medical device tax that is part of the law could devastate those related companies.
Pain Therapeutics, Inc. (NASDAQ – PTIE - $3.00) is a biotech firm that has been on an up and down ride in 2013. Back in May the stock was leveled with nearly a 50% drop in one trading session when its partner for the Company’s lead brand REMOXY painkiller, Pfizer (NYSE-PFE) was reviewing the program and considering abandoning it. In August Pfizer re-started a new study for the lead drug, which put PTIE back in the accumulation phase, part one of our 2013 4Q formula.
The new study for REMOXY is expected to be complete by the end of this month, with approval to follow. This should keep Pain Therapeutics on track for profitability from an EPS perspective in 2014 as forecast; which is part two of our winning formula for the rest of 2013. FY P/E is a low 13 based on 2014 EPS estimates. Technical analysis is bullish in the shorter term DMA and very bullish in the long term (50-day) DMA.
PTIE has real potential to take off as REMOXY gets closer to market release. $5 by the end of 4Q13 is a level which should be reached.
Have a great day!
Disclosure: Goldman Small Cap Research analysts are neither long nor short these shares but may elect to purchase the stock within the next 48 hours.
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